His decision means a by-election will be formally called by the speaker in the coming days and held within a matter of weeks.

The election will prove an important test for a still relatively new state Liberal government and a Labor Party still coming to terms with being in opposition after its unexpected defeat in November 2009.

Mr Hulls has been the Niddrie MP for 16 years and holds the seat by a 6.9 per cent margin.

The former deputy premier last week said whoever stepped in to contest the seat for Labor faced an extremely tough task.

"It will certainly be a hard-fought battle; by-elections always are.

"Whoever the candidate is, I will support them and their campaign, which will no doubt centre on the huge increase in the cost of living since the Liberal government has come to power and the huge cuts they have brought to education."

Formerly a federal MP in the Queensland seat of Kennedy, Mr Hulls has spent 24 years in public life.

In June he had a near-death experience when he suffered epiglottitis, a condition that swells the windpipe and restricts breathing.

The father of three was placed in an induced coma for five days before recovering.

Mr Hulls said that experience and the desire to spend more time with his young family were big motivators behind his decision.

"Now is the right time. After my health scare I reassessed my life and decided I wouldn't contest the 2014 election.

"As deputy leader, I decided that having made that decision I would inform the party that I would not go back to Parliament and allow [leader] Daniel Andrews to renew and allow someone new and fresh to come in.

"[Doctors] still haven't been able to tell me what caused the [epiglottitis attack], but those type of near-death experiences make you reflect and now is the right time to make this decision."

Mr Hulls said despite retiring from public life he would remain passionate about social justice and keep a close eye on issues in his electorate.