His decision means the loss of another heavyweight figure for Labour in 2015 along with Jack Straw, Dame Tessa Jowell and David Blunkett.
It is another blow for Scottish Labour after Johann Lamont resigned as leader with a warning that Westminster was trying to run it like a branch office.
Darling has been an MP in Edinburgh since 1987 and is best known for steering the UK through the financial crisis under the premiership of Gordon Brown, later revealing that No 10 had unleashed “the forces of hell” on him after he issued a stern warning about the likely severity of the recession.
Speaking to the Financial Times, the senior Labour figure, who led the Better Together campaign in the Scottish referendum, revealed he was stepping down and spoke of how he was frustrated that Labour had not used that campaign to do better north of the border.
In the interview, Darling also endorsed Jim Murphy to lead Scottish Labour. Murphy, who stepped down as Ed Miliband’s shadow development secretary on Sunday on Sunday, has two rivals: MSPs Neil Findlay and Sarah Boyack.
“Jim has the enthusiasm, the energy and above all he’s a fighter. For too long we have sat back when we needed to fight,” Darling said.
On the subject of the Scottish independence referendum, he said: “My frustration is that we actually won … You can’t say it often enough. We made the arguments, we had confidence in ourselves.”
Turning the possibility of an EU referendum, which Labour is resisting, Darling said he hoped to use his campaign experience in Scotland to help argue for Britain in Europe in a referendum.
He suggested it was all but inevitable whoever wins the next election, saying: “It’s a boil that has to be lanced.”
He said he learned from Scotland that “if you sit back and wait till the other lot have taken so much ground then you’re on the back foot … you pay a heavy price.”
Ed Miliband said Darling “distinguished himself as an extraordinary public servant - a servant of the Labour Party, a servant of Scotland and a servant of the United Kingdom”.
Polls in Scotland show surging support for the Scottish National party despite its unsuccessful yes campaign, with a YouGov survey finding 52% of people favoured leaving the UK only weeks after the vote to stay in the union.
On Sunday, Alex Salmond, the outgoing SNP leader and first minister, hinted the door could be open for coalition with Labour if his party took enough seats next year. This raises the possibility Salmond could return to Westminster and take a senior role in the government in May.
Speaking on the BBC’s Andrew Marr Show, Salmond said: “I certainly think that there’s no chance whatsoever of the SNP ever going into coalition with the Conservative party, with their attitude towards Scotland, and their attitude towards people in general. I think it’s unlikely [with Labour] but who knows, people change sometimes, parties change sometimes, party leaders change sometimes and lead them in a different direction.”
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