Eden-Monaro Labor MP Mike Kelly to resign, prompting a by-election

Federal Labor MP Mike Kelly is retiring from politics due to health reasons, prompting a by-election in his southern NSW seat of Eden-Monaro.

"I don't believe I can continue to do the job to the extent - and with the commitment and the physical demand - that I would want to," he told the ABC on Thursday.

Dr Kelly says the decision is gut-wrenching but believes a by-election will bring local issues including the bushfire crisis to the fore.

The by-election is expected to be a three-cornered contest with high-profile coalition members jostling to run and the opposition keen to retain the seat.

Bega mayor Kristy McBain is likely to run for Labor.

NSW Deputy Premier John Barilaro, NSW Transport Minister Andrew Constance and Liberal senator Jim Molan have all been touted as possible coalition candidates.

But Mr Barilaro says a three-cornered contest isn't in the coalition's best interests.

Mr Barilaro says he wouldn't run against Mr Constance, and will speak with his family over the weekend about having a tilt at federal politics.

"I can't rule it out, don't rule it in," he told Sky News. "Everybody's got to be honest with themselves and it will be something that I'll weigh up over the next few days."

Mr Barilaro's state electorate covers the Queanbeyan area, where the majority of the Eden-Monaro population resides.

"If I do this, I do this knowing I could be out of politics," he said.

Liberal senator Jim Molan says he's considering all options.

Eden-Monaro was once considered a bellwether seat - going to the party that wins government - but Dr Kelly brought that to an end in 2016.

Labor frontbencher Tanya Plibersek has praised her long-serving colleague.

"He is a fantastic human being," she told the ABC.

"He's served Australia in many, many theatres of war, on the frontline overseas, extraordinarily brave, intelligent, compassionate man, who has contributed not just through his military career but made an extraordinary contribution in our federal parliament."

Eden-Monaro also takes in the bushfire-hit town of Cobargo, whose residents gave Prime Minister Scott Morrison an extremely hostile reception earlier this year.

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