Mark Menzies, who was suspended by the Conservative Party over allegations he misused campaign funds, is to quit as an MP at the next election.
Mr Menzies also confirmed he has left the Tory Party, which said he had shown a “pattern of behaviour that falls below the standards expected of MPs”.
It said it could not conclude there had been a misuse of party funds after an internal investigation. Mr Menzies has strongly denied the claims.
There will be no immediate by-election.
Mr Menzies was suspended as a Tory MP after claims emerged in the Times that he called a party activist in the early hours to ask for £6,500 to pay “bad people” who locked him in a flat.
He was also accused of using £14,000 in campaign money for medical bills.
In a statement, Mr Menzies said he was standing down as the MP for Fylde in Lancashire “due to the pressures on myself and my elderly mother”.
He continued: “This has been a very difficult week for me and I request that my family’s privacy is respected.”
The Conservative Party launched an investigation after the claims emerged in the Times newspaper earlier this week.
It said it found the “money in question that was sent to Mark Menzies MP was signed off by the two signatories of Fylde Westminster group”.
A statement from the party said that group is “outside of the remit of both the Conservative party and Fylde Conservative Association”, adding: “Therefore we cannot conclude that there has been a misuse of Conservative party funds.”
It also said there had been failings from “individuals looking after donations to local campaign funds which lie outside the direct jurisdiction of the Conservative party”.
Earlier this week, Lancashire Police said it was aware of the reports about Mr Menzies but had not received a formal complaint.
A statement from the force continued: “We will make contact with those impacted in due course to see whether they wish to make a complaint.”
The party said it would “share any information with the police if they believe it would be helpful to any investigation they decide to undertake”.
It also suggested Mr Menzies may have breached the Nolan principles, which are supposed to guide public office-holders. They are selflessness, integrity, objectivity, accountability, openness, honesty and leadership.
Mr Menzies will sit as an independent MP until the next election is called – but by not resigning immediately, it means there will not be a by-election in the constituency.