SPEAKER Peter Slipper has resigned his post, telling the parliament tonight that he was standing down.
Mr Slipper will sit on the cross bench as an independent.
Anna Burke was elected as Speaker following a short caucus meeting. Ms Burke, who represents Chisholm in Melbourne’s east, has been acting Speaker since April.
She was elected un-opposed.
Coalition MP Bruce Scott was elected deputy speaker, defeating Labor's Steve Georganas in a ballot 74-70.
During an emotional speech Mr Slipper said he thanked the parliament for his support during his tenure as the 27th speaker and said he was resigning with "great sadness."
"I hold no rancour," Mr Slipper said.
Mr Slipper said when he arrived as Speaker he wanted to improve parliamentary practise and behaviour.
"I regret recent proceedings have prevented me from pursing these reforms and I believe so strongly in the importance of this house... that is far more important than my own future," he said.
Mr Slipper did not attack Opposition Leader Tony Abbott, who had earlier moved a motion to have him sacked as Speaker.
"He [Mr Abbott] has been a friend for a very long time, he came to my wedding, when he was overlooked we sat and talked through the difficulties. I don't hold anything against the leader of the Opposition who I think is a person of fine character," Mr Slipper said.
"I think we are singled privileged to have a lady of the amazing stamina that we have as Prime Minister."
"So I leave this position without rancour, with a great deal of sadness ... and more importantly with a great deal of regret."
"But I think that across the political spectrum, the reality is that it is not sufficient that I should reject completely the claims that have been made against me.
"What's really scary is that those sort of complaints can be made against any of us and all of us would be in the same position.
Mr Slipper remains confident however that he will be cleared saying he looked forward to "being vindicated on the false claims made against me".
Prime Minister Julia Gillard said: "I think at a human level, each of us would wish the best for him and his family at what is clearly a distressing and very pressurised time."
Mr Abbott said all MPs were feeling for Mr Slipper as "a human being."
"So we do feel for him as a human being while we think that he has done the right and honourable thing by resigning from his high office tonight," Mr Abbott said.
During the speech Mr Slipper paid particular tribute to Acting Speaker Anna Burke who had stepped into the role.
"Nobody would have expected that you would have thrust upon you the responsibility that have been thrust upon you," Mr Slipper said.
Mr Slipper congratulated deputy Speaker Bruce Scott, who he called a close friend, for staring down the challenge from Senator Barnaby Joyce in preselection for the Queensland seat of Maranoa.
Leader of the House Anthony Albanese said caucus would meet tonight to discuss Mr Slipper's replacement.
Speaking on ABC TV, Mr Albanese, defended Labor's decision to vote earlier in the day to keep Mr Slipper in the Speaker's chair.
"It is entirely appropriate that the government not rush to judgment with regard to voting to remove a Speaker. That hasn't happened in 112 years of the parliament," he told 7.30.
"We disassociated ourselves from those comments. We said they were offensive and wrong."
Tasmanian Independent Andrew Wilkie withdrew his support for the government in January after it reneged on its agreement with him for national poker machine reform.
When the government got Mr Slipper into the chair it no longer needed Mr Wilkie's vote.
"Peter Slipper has done the right thing by resigning as Speaker of the House of Representatives," Mr Wilkie said tonight.
"The length of time Peter Slipper had vacated the Speaker's Chair and the dreadful content of his text messages had well and truly made his position untenable. The situation was seriously diminishing the Office of Speaker and dragging down the reputation of the Parliament more broadly."
Mr Wilkie voted with the Coalition this afternoon to sack Mr Slipper.
"The whole sorry saga reflects poorly on the Government. It only elevated Peter Slipper to the Speaker's Chair to sideline me and renege on the promise to implement meaningful poker machine reform. The damage the episode has done to the Government is entirely of its own making," Mr Wilkie said.
Independent Rob Oakeshott said he acknowledged "the difficult but sound decision" of Mr Slipper to resign as Speaker of the House.
"I confirm that I have spoken personally with Mr Slipper, and in my view he has made the correct decision," Mr Oakeshott said.
The former LNP member has once again been the focus of federal politics after court documents revealed that Mr Slipper sent lurid and sexist text messages to his staffer James Ashby.
Among the messages, Mr Slipper referred to female genitalia as "shell-less mussels". The messages prompted the Opposition to say he was unfit for office.
Mr Slipper had earlier survived a motion to remove him from office — moved by Mr Abbott — was defeated by 70 votes to 69 with the government supported by independent MPs Craig Thomson, Rob Oakeshott, Tony Windsor and Greens MP Adam Bandt.
Tasmanian independent Andrew Wilkie voted with the Coalition.
Mr Slipper issued a short statement after the afternoon vote, apologising for the texts.
"It was intended at the time that text messages be private between Mr Ashby and me," he said.
"A number of these text messages refer to women and nothing excuses their content ... I understand why people, particularly women, would be offended by these statements and I unreservedly apologise for them."
During the debate Mr Abbott said it was "crystal clear" Mr Slipper was no longer a fit and proper person to uphold the dignity of the Parliament.
But Ms Gillard hit back, saying Mr Abbott did not need a motion to highlight misogyny and sexism; he needed a mirror - and the motion should be rejected.
WITH JUDITH IRELAND, DAN HARRISON AND JESSICA WRIGHT