Trevor Zinck had said he would fight for his job shortly after hearing that the house had been reconvened by Speaker Gordie Gosse for noon on Thursday.
But the embattled politician said he would step down after learning he would lose transitional funding — about $51,000 — to close his office if he was removed by his colleagues.
"That would have meant my office would have closed immediately and no expenses would have been covered," said Zinck, adding that a single-mother working at his constituency office would be out of a job with no pay. "All that stuff would have been taken away and I don't think it would be fair to the community just to close up like that."
Zinck pleaded guilty Monday in Nova Scotia Supreme Court to breach of trust and fraud over $5,000 for filing bogus expense claims. Three other former politicians have also pleaded guilty to fraud-related charges that stemmed from a 2010 investigation by the province's auditor general into constituency allowance spending.
Gosse said Zinck submitted his letter of resignation during a meeting at 4:16 p.m. The Speaker then cancelled the recall notice.
There had been mounting pressure from all political parties for Zinck to resign, but he repeatedly rejected that idea.
The rare decision to reconvene the house was made following an NDP caucus meeting Wednesday in Halifax.
Deputy premier Frank Corbett said the government wanted to give Zinck time to resign. But after a review of house rules by legislative counsel, his time was up, Corbett said.
"It wouldn't have been fair to ask somebody to resign and then an hour later call the house back," he said.
If removed, Zinck would have forfeited his pension as a result of recent amendments passed by the legislature. As well, he would not get a severance.
The last time the house was recalled to expel a sitting member was in 1986, when a special statute was passed to force out Billy Joe MacLean.
MacLean, a cabinet minister in then-premier John Buchanan's Conservative government, had pleaded guilty to filing false expense claims.
Zinck's sentencing hearing is scheduled for Aug. 7.
He was first elected as an NDP member in 2006 and re-elected in 2009.
Following his resignation, Zinck said he intended to run as an Independent candidate in the election expected later this year, pending the outcome of the sentencing hearing.
"The campaign starts tonight," he said. "I'm going to get past the court sentencing and I am going to run."