Metiria Turei has ruled herself out of a ministerial role, should the Greens form part of the next Government.
It comes nearly three weeks after admitting she'd committed benefit fraud in the 1990s.
"I will not be resigning as the co-leader of the Green Party or as a Member of Parliament," she told media on Thursday afternoon.
"I will not be seeking a ministerial position in a new Labour-Green Government. That's because I have been building a movement for compassionate welfare and for ending poverty in New Zealand. I have been doing that work now for more than 20 years, and 15 years as a Member of Parliament," she said.
"That work is more important than any one person. Change is coming, and I am proud to be part of leading that change at this election. But it's true, that change always comes at a price, and I knew that when I first told my story.
"Today, that price has been paid."
Labour leader Jacinda Ardern said Ms Turei has made the right call.
"This is an incredibly sad set of circumstances, but I think Metiria has made the right decision."
On Thursday, Newshub revealed more questionable details about her living situation back when she was a solo mother on the Domestic Purposes Benefit, studying for a law degree.
She spent some of that time living with her mother, which she did not reveal herself. Ms Turei responded by saying she was financially independent from her mother.
"I was making a deliberate decision around keeping my income sufficient for my daughter and I to live, and for me to study."
It also emerged she had enrolled to vote in Mt Albert at the same address where the father of her baby lived.
Ms Turei said it was so she could vote for her friend, and she never lived there. She reiterated that claim on Friday, saying she didn't bring it up because she "didn't remember" doing it.
Three weeks ago she admitted lying about her flatmates to get more in the accommodation supplement.
"I opened myself to this because I want New Zealanders to understand what it is like to live as a beneficiary in this country, what it is like to live in poverty and what it is like to live with the discrimination and scrutiny that comes with being a beneficiary," Ms Turei said on Friday.
Ms Turei said she considered resigning but won't because her work to end poverty is "critical".
"I have had a huge number of emails and messages just in the last 24 hours from people saying 'please don't go because we need someone to speak for us on these issues'."
Co-leader James Shaw said her resignation was discussed, but he never asked her to step down.
"I completely support her as co-leader."
He said Ms Turei is in a "privileged position" to take on the welfare system while "thousands" of others aren't.
The Greens have a memorandum of understanding with Labour, who dropped a bombshell of their own earlier this week when Ms Ardern and Kelvin Davis took over the leadership in a bloodless coup.
"It's turned to mushy peas for her, hasn't it? It's pretty ugly," Mr Davis told The AM Show on Friday morning.
"If you're going to open up about yourself like that, you've got to tell the whole truth and nothing but the truth. Don't leave little bits out."
Ms Turei has not yet personally spoken with Ms Ardern about her decision to not go for a ministerial role. The two parties have been in touch however, Ms Turei saying Labour was told in advance of her plans.
Ms Turei has been the Greens' spokesperson for building and housing, justice, electoral issues and inequality. She says it's more important to "fix the welfare system" than get herself a ministerial role.
"My purpose has genuinely been to open this conversation, and if stepping aside from a ministerial post helps to continue that conversation... then that's worth doing."
ACT leader David Seymour wasn't satisfied, renewing his call for Ms Turei to resign.
"Jacinda Ardern needs to make Metiria Turei's resignation a condition of the Greens' participation in a Labour-led Government," he tweeted.
"Metiria Turei, safe on the party list, wants another three years paid by the taxpayer. That’s a failure to show true remorse."
Comedian Guy Williams, who has publicly backed the Greens' campaign, hasn't been put off by Ms Turei's admissions.
"Win or lose I love what Metiria Turei has done. She's stood up at great personal cost, to fight the criminalisation of the poor."