A sex scandal yesterday rocked Australian Prime Minister Kevin Rudd's scandal-plagued Labour Party in the state of New South Wales - vital to Mr Rudd's re-election hopes.

New South Wales Labour Health Minister John Della Bosca, a factional heavyweight at state level in the same centre-left party as Mr Rudd, quit his post on Monday amid newspaper revelations he had a extramarital affair with a 26-year-old woman.

"I made some poor decisions. You have to take your medicine if you make bad decisions," Mr Della Bosca told reporters yesterday.

The state Labour government is deeply unpopular with voters, and opinion polls point to it being thrown out of office in 2011 over a string of scandals and its inability to improve services such as roads, hospitals and schools.

But the state is also a national keystone and with Mr Rudd weighing the possibility of a snap election early next year to overcome an obstructive upper house, Labour's woes are of deep concern to Mr Rudd and party strategists.

"I don't think there's anyone in the federal government who's going to want to be distracted by anything like this," said Agriculture Minister Tony Burke.