Malcolm Turnbull has formally resigned his seat, as his successor Scott Morrison paid tribute to him as a prime minister who delivered some "very big things".
Mr Turnbull, who first entered parliament in 2004, on Friday confirmed his resignation from the NSW seat of Wentworth in writing to Speaker Tony Smith.
Mr Smith said he was now considering possible dates for the Wentworth by-election.
Having stepped down from the Liberal leadership following Peter Dutton's challenge, Mr Turnbull declared it was best that former prime ministers do not stick around parliament.
"Malcolm has been a dear and close friend to me for a very long period of time and he has served his country well and grandly," Mr Morrison told reporters in Jakarta on Friday.
"He'll be well remembered, I believe, over time as a prime minister who delivered some very big things for Australia."
Mr Morrison counts the Snowy Hydro 2.0 scheme and Western Sydney Airport among his predecessor's best achievements.
He said retirement from parliament would enable Mr Turnbull to exit from the "madness of politics".
"You deserve that mate, you absolutely deserve that. You've served our country well, and on behalf of our country as prime minister, I just want to say thanks."
The Wentworth by-election will be hotly contested both in terms of Liberal Party preselection and the poll itself.
Former Business Council of Australia executive director and same-sex marriage campaigner Andrew Bragg is emerging as the frontrunner to replace Mr Turnbull as the Liberal candidate.
Former Australian ambassador to Israel Dave Sharma and former prime minister Tony Abbott's sister Christine Forster are also in the running for preselection.
Labor has chosen local businessman Tim Murray.
Business owner and City of Sydney councillor Angela Vithoulkas confirmed on Thursday she would stand as an independent.
Independent Kerryn Phelps, another City of Sydney councillor, is also considering a tilt.
Australian Associated Press