Malcolm Turnbull formally resigned his post, as his successor, Scott Morrison, paid him tribute as prime minister and gave him some "very important things".
Turnbull, who first joined parliament in 2004, confirmed Friday his resignation from Wentworth's post in New York in writing to President Tony Smith.
Smith said he was now considering possible dates for the Wentworth by-election.
After abandoning the liberal leadership after the challenge of Peter Dutton, Turnbull declared that it was better that the prime ministers did not stay in the parliament.
"Malcolm has been a close and dear friend to me for a long period of time and has served his country well and grandly," Morrison told reporters in Jakarta on Friday.
"You will remember it well, I think, over time as prime minister who delivered some very big things to Australia."
Mr. Morrison tells the Snowy Hydro 2.0 scheme and the Western Sydney Airport among the best achievements of his predecessor.
He said that withdrawing from parliament would allow Turnbull to get out of the "politics madness".
"You deserve that partner, you deserve it, you have served our country well, and in the name of our country as prime minister, I just want to say thank you."
Wentworth's by-elections will be harshly contested both in terms of the preselection of the Liberal Party and the poll itself.
The former executive director of the Australian Business Council and a gay marriage activist, Andrew Bragg, is emerging as the favorite to replace Mr. Turnbull as a Liberal candidate.
Former Australian ambassador to Israel, Dave Sharma, and the sister of former Prime Minister Tony Abbott, Christine Forster, are also in the running for the preselection.
The Labor Party elected local businessman Tim Murray.
The business owner and city councilor of Sydney, Angela Vithoulkas, confirmed on Thursday that she would remain independent.
Independent Kerryn Phelps, another councilman from the city of Sydney, is also considering an inclination.