The upper house MP leaked intimate Penthouse modelling photos of Hawkesbury MP Robyn Preston to fellow party members about five years ago, when the pair were locked in a bitter preselection battle.
"Peter Poulos contacted me today and informed me that he will be resigning his parliamentary secretary role," the premier told reporters on Friday.
"I've accepted his resignation."
The photos, which were taken in the 1980s, were sent via email as Ms Preston battled to run for the seat of Hawkesbury in 2019.
Ms Preston was eventually endorsed as the Liberal candidate, winning the upper house seat at the 2019 election.
She appeared to defend Mr Poulos this week, saying they had become "great mates", she'd accepted his apology and she wished the matter to be "put to bed".
"This is something that's been brought up for decades now," she said.
This week, Mr Perrottet called Mr Poulos' actions inappropriate, but stressed that "people make mistakes" and he was satisfied with Mr Poulos' apology.
Mr Poulos will be replaced as parliamentary secretary for Wollongong and the Illawarra but remains on the Liberal upper house ticket for the state election in March.
"Obviously he's made a mistake. He's apologised for that," the premier said on Friday.
"I think he gave a heartfelt apology.
"Not just to the people of the state, but to Robyn Preston.
"She's accepted that apology as well."
Ms Preston said Mr Poulos has personally apologised by phone.
"He was very remorseful," she said on Wednesday.
"Peter and I are great mates.
"We have been in the party and we have a great following as friends we support each other along the way in our journey in politics."
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