Chuka Umunna said he withdrew from the Labour party leadership race, saying he is not comfortable with the "added level of pressure" that comes with being a candidate.
The 36-year-old was considered by many to be a front-runner in the race to succeed Ed Miliband, but said he had "very real concerns and worry about this bid's impact on those close to me".
He said in a statement: "As a member of the Shadow Cabinet, I am used to a level of attention which is part and parcel of the job. I witnessed the 2010 leadership election process close up and thought I would be comfortable with what it involved.
"However since the night of our defeat last week I have been subject to the added level of pressure that comes with being a leadership candidate.
"I have not found it to be a comfortable experience.
"Consequently after further reflection I am withdrawing my candidacy."
A source close to the shadow business secretary told Sky News the suggestion his decision to withdraw was due to forthcoming negative stories in the press was "utter nonsense".
The shock withdrawal means there are now four declared candidates: shadow health secretary Andy Burnham; shadow home secretary Yvette Cooper, shadow international development secretary Mary Creagh; and shadow health minister Liz Kendall.
Former culture secretary Ben Bradshaw, who is believed to be considering a run for the Labour party deputy leadership, said Mr Umunna was a "terrible loss" to the contest because he was the candidate the Conservatives "feared the most".
He told Sky News the decision was "absolutely tragic" and said his reason for doing so was a "sad indictment" on society.
But he insisted the field remained strong, adding: "We are blessed in the Labour Party. We have a strong field of candidates.
"I'm sure when the dust settles on this, the public will have a chance to look at them."
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Gallery: Runners And Riders For Labour Leadership
The politician was pictured at the weekend arriving at TV studios for an interview hand-in-hand with his girlfriend, who had previously remained out of the public eye.
Mr Umunna's statement said he had decided before the General Election to stand for leader if Labour was defeated, but that he "dearly hoped" he would not have to implement the plan.
"I also thought I understood the scrutiny and attention a leadership contest would bring," he said.
"I apologise to all those who have kindly supported and encouraged me to do this and for disappointing them. I know this will come as a surprise to many but I had always wondered whether it was all too soon for me to launch this leadership bid - I fear it was.
"Most importantly, I continued to have very real concerns and worry about this bid's impact on those close to me.
"I intend to carry on playing my full role as a proud member of our Shadow Cabinet taking on the Tories. I also hope to play a leading role in Labour's campaign to keep the UK in the EU during the forthcoming referendum which is absolutely crucial.
"Most importantly, I will as ever continue to serve the area I know and love - the Streatham parliamentary constituency."
