Customer Service Minister Victor Dominello announced on Wednesday he had "made the difficult decision to retire from politics" after 14 years and four elections.
"A family health issue emerged in mid-2019 which has since deteriorated. Accordingly, I will not contest the next election in March 2023," he said in a statement.
He denied he was leaving a sinking ship, saying he initially wanted to leave last year when former premier Gladys Berejiklian and former deputy premier John Barilaro resigned but was convinced to stay by Mr Perrottet.
"It's like any team - you need to have renewal ... no-one is irreplaceable," he told Sydney radio 2GB on Wednesday.
The popular Ryde MP who has served as a minister since 2011, is known for doing his job without becoming embroiled in scandals and has kept four of his staff for 10 years.
He offered his "heartfelt thanks to the premier for his leadership, strong vision and reform zeal for the people of our great state".
Mr Perrottet paid tribute to his departing minister saying he helped lead the government into the digital age, "making it easier for people to access government services, as well as delivering nation-leading initiatives such as the Digital Driver Licence".
Mr Dominello oversaw the digital evolution of Service NSW, with the ServiceNSW app, QR check-ins and Dine & Discover vouchers which also played a critical role during the pandemic and recent natural disasters.
His flagged departure comes as the minority Perrottet government deals with multiple scandals including the Barilaro "jobs for the boys" crisis which has dogged the premier for two months and cost Stuart Ayres his frontbench position and deputy Liberal leadership.
Allegations of bullying and harassment in the office of former fair trading minister Eleni Petinos also led to her being dumped from cabinet last month.
Mr Dominello's decision to retire comes a day after Riverstone MP Kevin Conolly said he was calling time on his political career at the next election.
The government has lost several members since the 2019 election.
Kiama MP Gareth Ward and Drummoyne member John Sidoti were booted from the Liberals and are now independents, following sexual and indecent assault charges and a corruption finding by the state's integrity watchdog respectively.
At a February by-election, the seat of Bega was lost to Labor for the first time.
Vaucluse MP Gabrielle Upton is leaving in March, while Health Minister Brad Hazzard and Pittwater member Rob Stokes are believed to be heading for the exit, although neither has yet confirmed the speculation.
In the upper house, Catherine Cusack left earlier this month, while Don Harwin retired earlier this year.
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