Joe Anderson will step aside from his current role as the Mayor of Liverpool.
Anderson made the announcement on Thursday, less than a week after he was arrested on suspicion to commit bribery and witness intimidation.
The 62-year-old is one of five people who were detained in a probe by Merseyside Police into building and development contracts in the city.
Anderson’s membership of the Labour Party was administratively suspended pending the outcome of the investigation, from which he has been bailed.
Deputy Mayor Wendy Simon, a councillor for Kensington and Fairfield, will oversee the day-to-day running of Liverpool City Council in his place.
“I have always done what I believe is best for the city, and I am taking the following action with those best intentions in mind,” said Anderson in a statement.
“It is important that everyone in Liverpool knows that our leaders are focussed on what is most important to the people; their livelihoods and, with a pandemic still in force, their lives.
“For this reason, I believe it is important that the city, and government, are reassured that our city is indeed operating in the correct way.
“I am, therefore, stepping away from decision-making within the council through a period of unpaid leave, until the police make clear their intentions with the investigation on the 31st December.
“I will make a further statement at that point. Wendy Simon will be acting as Mayor and I have all faith that she will provide the leadership our city requires at this time.
“The arrest on Friday has also been a painful shock for me and my family, following a difficult few months.
“I need to focus on their future and returning to a normal they can recognise, with the reassurance that I am no longer under suspicion.
“Therefore I am going to focus on co-operating with the police in their ongoing inquiry, as I believe time will make it clear that I have no case to answer.”