Michael Daley says he will stand down as NSW Labor leader until after the upcoming federal election.

The announcement comes after Labor’s devastating loss in the state election.

Deputy leader Penny Sharpe will serve as interim leader, with Mr Daley still planning to recontest the leadership ballot after the federal election.

Former Labor senator Graham Richardson says Mr Daley “knows the writing’s on the wall”.

“He’s walking backwards and I think that’s a very smart thing for him to do.”

Political commentator Peta Credlin says federal Labor leader Bill Shorten is behind the sudden announcement.

“This shows how much power Bill Shorten has got because Daley would’ve been a huge distraction for Shorten in NSW.

“He would’ve been moved to one side.”

Click PLAY below to hear the full interview