Kiama MP and NSW government Minister Gareth Ward says he is under investigation over allegations of sexual violence dating back to 2013.
NSW Police on Thursday afternoon revealed it had established a strike force to investigate the claims.
Mr Ward issued a statement denying any wrongdoing.
He has removed himself from the Liberal Party room pending an investigation and will sit on the crossbench.
"Today I have been made aware by a journalist of an investigation into me by NSW Police," he said.
"I have not been contacted by police in relation to any allegations.
"Until this matter is resolved, it is appropriate I stand aside from my role as Minister. I will also remove myself from the Liberal Party room.
"I will not be making any further comment at this time."
Mr Ward is the Minister for Families, Communities and Disability Services.
NSW Premier Gladys Berejiklian said she accepted Mr Ward's decision to step down and Attorney General Mark Speakman would act in his portfolio.
"I was made aware through media reports today that an MP is under investigation by police," she said.
"I have subsequently received advice from Minister Gareth Ward of his decision to step aside as Minister and sit on the crossbench while there is speculation about his future.
"I support his decision."
Earlier, before Mr Ward named himself, Deputy Premier John Barilaro told 2GB the matter involved "very serious allegations".
"If there is an individual in this Parliament that is under investigation, then of course we will need to deal with that," he said.
"This is not acceptable."
Mr Barilaro described the incident as "Groundhog Day", after former Nationals MP Michael Johnsen quit parliament in March over sexual assault and sexting allegations.
Mr Johnsen denies the allegations but his resignation has prompted a by-election on May 22 in his Upper Hunter seat.
"This is how I started this by-election," Mr Barilaro said.
"When accusations were made in the house about an individual … and it was the former member for Upper Hunter, Michael Johnsen, I dealt with it in two and a half hours in benching him."
"The same would have to apply here."
