Chris Minns is the new opposition leader of NSW after Michael Daley withdrew from the Labor leadership race.
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Mr Daley decided not to nominate at the NSW Labor caucus meeting on Friday morning for the good of the party, he told reporters after the meeting.
Mr Minns was elected unanimously.
"I believe that, given it was completely clear that Chris had majority caucus support, it was wholeheartedly in the best interests of the party that I'm not pushing this to a ballot," Mr Daley said.
Mr Daley, who led Labor to the last NSW election in 2019, said he believed in giving the party's rank-and-file a say in the leadership.
But he believed that avoiding a drawn-out leadership ballot will bolster the party's chances in the next federal election, due within 12 months.
He continued to insist he had the 15 MP signatures he needed to confirm his nomination as leader.
Mr Minns, who represents the seat of Kogarah, had already secured at least 23 votes from a caucus total of 50.
The party's divisions have been on show for the past fortnight, with allegations a "dirt file" about Mr Minns was circulated by a colleague's office and ex-leader Jodi McKay stepping down amid white-anting accusations.
Mr Daley promised he and his supporters would fall in behind Mr Minns to give the party the greatest chance of retaking government in 2023.
The two rivals agreed to put the contest behind them at a meeting ahead of the caucus gathering.
"Chris and I agreed that the divisions have to end today," Mr Daley said.
"I offered him my full and unqualified support to do everything I can, firstly to unify the show, and secondly to move forward."
Mr Minns had promised to be a leader for all the caucus and the party, he said.
Numerous rounds of applause were heard emanating from the 30-minute caucus meeting at NSW Parliament.
Mr Daley said supporters of both camps spoke in favour of unity.
After the meeting Mr Minns only said there were "huge challenges ahead" for NSW Labor. He will address the media again on Friday afternoon and is expected to announce his new frontbench on Tuesday.
His leadership pitch was about providing a more positive alternative to the decade-old coalition government.
He said a Labor NSW government in 2023 would support domestic manufacturing and develop "good, well-paying, middle-class jobs".
Australian Associated Press
