Leader of the right-wing Reform UK party Nigel Farage has resigned from parliament, vowing to stand for his seat again in a by-election, amid mounting controversy over an undeclared financial donation.

In a public statement streamed on Reform UK’s YouTube without journalists present, Farage announced he “will resign as a Member of Parliament for Clacton-on-Sea, thereby forcing a by-election”.

“I’ve decided that the people of Clacton should be the judges of my actions,” he said.

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“And that is why I will be putting my name forward to stand in this by-election. I will fight to win. This will be a people versus the establishment by-election.”

Farage, a leading campaigner for Brexit, is one of the most influential politicians in modern British history.

For more than a year, his Reform party has led almost every national opinion poll and won local elections, posing a threat to the century-old dominance of the Labour and Conservative parties.

Reform Party leader Nigel Farage insists there is "no case to answer" over the gift. (EPA PHOTO) Credit: AAP

But Farage in recent weeks has appeared irritable and uneasy after it was revealed he had accepted a £5 million ($A9.6 million) gift from a Thailand-based billionaire crypto investor and not disclosed it.

He is being investigated by parliament’s standards watchdog over the £5 million donation and has also been referred to the regulator over a report of separate donations.

The revelation around the donation has sparked heavy scrutiny of Farage’s finances and property.

During the press conference, Farage declared his innocence. He claimed he has done “nothing wrong” and has not broken the law in any way due to the donation.

“I have not misused public money,” he proclaimed.

Farage said the parliamentary standards probe is evidence of the “establishment” using “foul means” to discredit him, telling viewers: “Standards are now being used as a political tool.”

As for the donation, Farage says it was given to him on an unconditional basis and he will use the financing for his personal security amid recent complaints about reporters harassing his family.

“I am the most physically and verbally attacked public figure or politician of modern times,” he said.

Farage raised particular concern about the broadcast of images of his daughter’s home. He said he has “never been angrier in my life” as a result of the publication.

“I will not tolerate any of my family being endangered because of what I choose to do in public life,” he said.

“So yes, you can ask am I angry, but I’ve never been angrier in my life.”

Reform has been leading UK opinion polls in recent months. (AP PHOTO) Credit: AAP

Farage had served as the leader of the UK Independence Party and resigned after the 2016 Brexit referendum, saying at the time that his political ambition had been achieved.

He later returned and launched the Brexit Party, which was subsequently rebranded as Reform UK.

There has been fresh upheaval in British politics recently following the resignation of Prime Minister Keir Starmer last month. Ruling Labour Party is expected to appoint a new leader in less than two weeks which is likely to be former Manchester Mayor Andy Burnham.

With AAP.