Robert Kilroy-Silk has quit his role as a BBC talk show host after 17 years, in the wake of the row over a newspaper article in which he criticised Arabs.
Mr Kilroy-Silk has hosted the BBC show for 17 years
The ex-MP's show had been suspended after his 4 January Sunday Express column described Arabs as "suicide bombers" and "limb amputators".
In a statement, Mr Kilroy-Silk said the time was right for him to leave.
The Muslim Council of Britain welcomed the news and hoped the episode showed anti-Arab racism was not acceptable.
However, Mr Kilroy-Silk has insisted his article was meant to attack Arab "regimes" rather than smear all Arabs.
He has also blamed his secretary for its publication - she sent in a column which had already been published in April 2003.
In his resignation statement, he said: "I have been overwhelmed by the support from the general public, and I continue to believe that it is my right to express my views, however uncomfortable they may be.
"However, I recognise the difficulties this has caused the BBC, and I believe my decision is the right way to resolve the situation.
"I will continue to lead the Kilroy Television Company Ltd and in addition to our existing commitments to the BBC, we will be bringing new ideas and programmes to the BBC and other broadcasters," he added.
Critics had accused the BBC of gagging Mr Kilroy-Silk by suspending his BBC One show, but Director of BBC Television Jana Bennett insisted the corporation's decision had not been about freedom of speech.
She said: "Presenters of this kind of programme have a responsibility to uphold the BBC's impartiality.
"This does not mean that people who express highly controversial views are not welcome on the BBC but they cannot be presenters of a news, current affairs or topical discussion programme."
She praised Mr Kilroy-Silk's "authority and style", and said the BBC was "very grateful" for his contribution over the years.
The corporation wanted to continue to work with him in other on-screen roles, and he remained "a substantial force in the media industry".
A new version of the Kilroy programme, featuring guest presenters, is being developed by the team at the Kilroy Television Company and should be back on air soon, Ms Bennett added.
The Muslim Council of Britain Secretary-General Iqbal Sacranie welcomed Mr Kilroy-Silk's decision, saying he had tried to hide behind the "noble principle of freedom of speech".
Mr Sacranie said: "Kilroy-Silk has for a number of years now been making extremely derogatory and xenophobic remarks about Arabs and Muslims."
He said he hoped the episode would "send out a clear signal that anti-Arab racism is every bit as unacceptable, every bit as odious as any other form of racism".