At a speech in London, Mr Farage, who was elected as an MEP for the party in 1999, said he had never wanted to be a career politician and was standing down. He has had two stints as leader of the Eurosceptic party since 2006.
“I now feel that I’ve done my bit, that I couldn’t possibly achieve more,” he said. “I won’t be changing my mind again, I assure you.”
The party’s only MP in the Commons, Douglas Carswell, reacted to Mr Farage’s announcement by sharing a smiling emoji with sunglasses on Twitter – a likely reflection of the bitter relationship between Mr Carswell and Mr Farage.
When asked about Mr Farage’s often criticised rhetoric on immigration, Mr Carswell told the BBC: “We went too far, and I criticised it when we went too far ... and it's not just morally wrong, it's electorally disastrous.
"This is a decent, generous country. People have a legitimate right of feel a sense of anger with their politicians but the answer to that is not to play on people's fears and anger but to promise the hope of something better."
Mr Farage added at his speech in London: “I have decided to stand aside as leader of Ukip. The victory for the Leave side in the referendum means that my political ambition has been achieved. I came into this business because I wanted us to a self-governing nation, not to become a career politician.
“Ukip is in a good position and will continue, with my full support to attract a significant vote. Whilst we will now leave the European Union the terms of our withdrawal are unclear. If there is too much backsliding by the Government and with the Labour Party detached from many of its voters then Ukip’s best days may yet to come”, he added.
The Ukip leader has often courted controversy in his political career and as leader of Ukip. During the EU referendum campaign he refused to apologise for a widely condemned “Breaking Point” poster showing a vast queue of refugees stretching into the distance on the Slovenian border.
Ukip gaffes and controversies
Ukip gaffes and controversies
1/18 European elections poster
Party's latest EU election posters branded 'racist' and compared to BNP campaigns
2/18 Farage 'car-crash' interview
Ukip spin doctor forced to intervene as Farage falters in disastrous radio interview
3/18 Neil Hamilton
Picture Exclusive: The year is 1998. The venue is a Springbok Club meeting. The flag is a symbol for white supremacists in South Africa. And the speaker is Ukip’s deputy chairman, Neil Hamilton
4/18 Kerry Smith
Kerry Smith resigned as would-be MP for South Basildon and East Thurrock after it emerged he had mocked gay party members as “disgusting poofters”, joked about shooting people from Chigwell in a “peasant hunt” and referred to someone with a Chinese name as a “Chinky bird”
5/18 Natasha Bolter
Former Ukip member Natasha Bolter was suspected of not having the teaching qualifications she professed to, only days after it was revealed that claims of her having attended Oxford University were also false
6/18 Ukip Calypso song
Mike Reid released a single in praise of UKIP trying to control the UK's borders, only to withdraw the single after being accused of racism for singing in a Jamaican accent
7/18 Janice Atkinson
Janice Atkinson, Ukip's South East chair, pictured by protesters while campaigning in Ashford, Kent with local party chair Norman Taylor
8/18 Ukip cancels Freephone
Ukip cancels Freephone number after protesters repeatedly called to push up costs
9/18 Farage 'car-crash' interview
Mr Farage appeared to be caught out on a number of issues, from Romanian neighbours to people speaking foreign languages on the train
10/18 Ukip employs illegal immigrants
Ukip criticised after European election candidate found employing illegal immigrants
11/18 Magnus Nielsen
Ukip candidate: 'Take away the right to vote to improve election turnout'
12/18 Poster model
A “British builder” portrayed in a Ukip poster accusing EU workers of taking UK jobs turns out to be an Irish actor - aka a migrant worker
13/18 'Arrest protesters'
Ukip called for police to arrest protesters ‘who call us fascists’ ahead of showdown with anti-fascist groups in Brighton
14/18 London Live make-up
Ukip's Nigel Farage reportedly refused to go on London Live 'without professional make up-artist'
15/18 Andre Lampitt
Ukip forced to suspend the "poster boy" of its European election broadcast, after it was revealed he had posted a series of vile racist comments on Twitter
Nigel Farage says he is taking taking legal advice over “outrageous” allegations that he is responsible for more than £50,000 of “missing” EU funding that was paid directly into his personal bank account
17/18 Have I Got News For You
Nigel Farage appears in Have I Got News For You, spends the entire episode being ridiculed over expenses and party 'fruitcakes'
18/18 Anti-gay comments
Local branch chairman for Ukip defends a party's councillor candidate Douglas Denny who called gay people “abnormal” and said he wished “they stop trying to ram it down my throat”, all while discussing whether the word “sodomite” should be used
Caroline Lucas responded to the resignation by saying Mr Farage “will be remembered for that disgusting poster and using suffering of refugees for political gain”. The Green MP added: “Farage’s legacy: toxic rhetoric on immigration, migrants feel unsafe. A divided UK and a stronger Establishment”.
During the 2015 general election he sparked outrage by suggesting a policy of rejecting migrants with HIV from coming into the UK, saying Britain should “put their own people first”.
Just last week Mr Farage suggested his party’s only MP could be removed from the party. Speaking about the MP on LBC radio, Mr Farage said: “What would he know?”
“We find somebody inside our party who doesn't agree with anything the party stands for, it's a very odd state of affairs.”
His comments came after Mr Carswell attacked the former party leader over his controversial "Breaking Point" posters.
Mr Farage had previously announced his resignation in May 2015, after he failed to win a seat in the Commons – only to change his mind days later.
In his speech on Monday he added: “Tough though it's been at times, it's all certainly been worth it. I came into politics from business because I believed that this nation should be self-governing. I have never been and I have never wanted to be a career politician.
“My aim in being in politics was to get Britain out of the European Union. That is what we voted for in that referendum, and that is why I now feel that I've done my bit, that I couldn't possibly achieve more than we managed to get in that referendum.
“So I feel it's right that I should now stand aside as leader of Ukip. I will continue to support the party, I will support the new leader, I will watch the renegotiation process in Brussels like a hawk and perhaps comment in the European Parliament from time to time.
“I'm also very keen to help the independence movements that are springing up in other parts of the European Union, because I'm certain of one thing – you haven't seen the last country that wants to leave the EU.
"It has been a huge chunk of my life, doing this, and it's not easy perhaps when you feel a degree of ownership of something to let it go. But has come at a cost to me and perhaps to those around me. During the referendum campaign, I said I want my country back. What I'm saying today is I want my life back, and it begins right now.”
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