Ex-chat show host Robert Kilroy-Silk has quit as leader of Veritas just five months after founding the party.
Mr Kilroy-Silk says his party must face the truth
The MEP, who was facing a challenge from disillusioned members, said it was clear from the general election voters were content with the older parties.
Mr Kilroy-Silk said it was impossible to run the party without significant cash and a proper structure.
He founded Veritas after a brief membership of the UK Independence Party, which he had wanted to lead.
Facing the truth?
In a statement, Mr Kilroy-Silk said: "It was clear from the general election result - and more recently that of the Cheadle by-election - that the electors are content with the old parties and that it would be virtually impossible for a new party to make a significant impact given the nature of our electoral system. We tried and failed.
"It is also the case that it is impossible to have an effective political party without a central administration and significant financial support. We have neither.
"In the circumstances I would be misleading the members of the party and the public if I pretended that we could make progress. I'm not prepared to do that.
"We must face up to the truth."
At the general election Veritas had 65 candidates none of whom won seats.
Mr Kilroy-Silk ran in Erewash but came fourth with just under 3,000 votes.
The party's candidate in the Cheadle by-election polled just 218 votes.
In his statement, Mr Kilroy-Silk apologised to Veritas members but he claimed much of what they had worked for in the party's short history had been absorbed by the political mainstream.
"This is true of the EU, immigration asylum, multi-culturalism and the flat rate of income tax," he said.
"I would like to thank all those who have been part of our exciting adventure and to say how sad I am that it has come to an end so quickly, but I can assure them that I shall continue to campaign on these issues and to represent my East Midlands constituents as an MEP."
Mr Kilroy-Silk said Veritas' acting chairman, Patrick Eston, would lead the party until a vote in the autumn.
UKIP MEP Derek Clarke, who like Mr Kilroy-Silk represents the East Midlands, meanwhile said the ex-chatshow host should quit the European Parliament.
Mr Eston said he wished Mr Kilroy-Silk well and said the Veritas leadership election result would be announced on 18 September.