Diane James will not formalise her nomination as Ukip leader just 18 days after she was declared Nigel Farage's successor.
The shock twist was confirmed after MEP Ms James released a statement saying she was quitting because she did not have "sufficient authority" to make the changes she thought necessary.
Her departure has led to immediate speculation that Nigel Farage could come back to lead the party for a third time in his political career.
In her a statement Ms James said: "It is with great regret that I announce that I will not be formalising my recent nomination to become the new leader of the party with the Electoral Commission.
"Having won the enthusiastic support of party members, I was nominated by them as the new leader at the recent Ukip Bournemouth conference.
"Since that time, I have been in discussion with party officers about the role. It has become clear that I do not have sufficient authority, nor the full support of all my MEP colleagues and party officers to implement changes I believe necessary and upon which I based my campaign.
"For personal and professional reasons, therefore, I will not take the electoral process further."
Ukip chairman Paul Oakden said he had confirmation of the resignation, adding: "I will now look to convene an emergency meeting of our National Executive Committee to confirm the process for electing Diane's replacement."
Suzanne Evans, one potential contender to take over, told The Independent: "There's no leadership contest at the moment.
"I'm not able to rule anything in or anything out."
Ms Evans led Ukip for a few days the first time Mr Farage resigned and won praise after writing the party's election manifesto, but fell out of favour when Mr Farage returned.
Ukip's only MP Douglas Carswell, also seen as a possible candidate, simply tweeted: “In the middle of supper. Not taking calls about Ukip stuff. It's shepherds pie, by the way.”
MEP Steven Woolfe, the party's immigration spokesman who was ruled out of the previous contest due to a bureaucratic error, is said to be ready to take over if called upon.
London Assembly Member Peter Whittle has also been praised following a competent performance during the London mayoral election.
Some Ukip insiders have suggested a new snap-leadership contest could be held to appoint someone to the top job rapidly.
Early reports suggested Ms James was leaving due to family reasons. She had been the frontrunner in the leadership contest, which ended on 16 September and saw her declared winner after taking 8,451 votes, some 46.2 per cent.
She saw off a challenge from local politician Lisa Duffy after other contenders Mr Woolfe and Ms Evans were ruled out.
During the leadership battle she promised to focus on Brexit negotiations but consistently refused to set out any policies, insisting she did not want to make it "on the hoof".
Party insiders suggested she had been pushed into standing and she also refused to take part in any of the leadership hustings, only taking questions at her own campaign events.
Then on Monday, the Electoral Commission confirmed that it was yet to receive paperwork from Ukip confirming Ms James was the party’s new leader.
It was reported that Ms James did sign the forms but added the words “under duress” in Latin underneath her signature, rendering it void.
One Ukip source said that it technically meant Mr Farage was still leader, but one journalist said the ex-leader told him he wouldn't return "for $10 million", adding: "No I'm not coming back, I'm retired".
But a Ukip insider said: “He may come back. He’s done it before. Don't rule it out”
Mr Farage first became leader in 2006 and led the party to second position in the 2009 European Parliament elections. He then stepped down to contest the 2010 general election, but came third in the Buckingham constituency, only to go on and win a Ukip leadership contest in November of that year and return to his party's top job.
He again announced his resignation as leader after losing in South Thanet in last year's general election, but his resignation was rejected and he remained in post, leading to accusations that he had quit and then ‘un-resigned’.
His return prompted bitter infighting that saw several of his rivals demoted or sacked. After Ukip's EU referendum victory Mr Farage resigned again saying he wanted his "life back".
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