Mr Rush released a statement on Tuesday after the complaint was dismissed following an investigation by the party’s candidate review committee, after an anonymous letter was sent to Labor Leader Michael Daley’s office and NSW Labor head office on December 21.

The Muswellbrook mayor said it had “obviously been a very difficult few days” after elements of the anonymous complaint were published in a Sydney newspaper on Sunday.

“At the centre of the complaint is an allegation of an assault. I categorically deny that allegation. People have the absolute right to make a complaint and if they feel aggrieved about an issue they should be encouraged to do so,” Mr Rush said.

“It helps no one to prematurely publish anonymous allegations. It attacks at all the fundamentals of fairness our society holds as valuable.”

Mr Rush was expected to win the seat in March held by Nationals MP Michael Johnsen on a margin of just 2.2 per cent, after the Upper Hunter was reduced from a Nationals stronghold to its most marginal state seat after the two men went head to head at the 2015 election.

Upper Hunter is one of four seats the Nationals party feared it could lose to Labor or the Shooters, Fishers and Farmers Party, along with Lismore, Tweed and Barwon.

On Sunday Mr Johnsen confirmed he passed an anonymous letter to police alleging an argument in September between Mr Rush and a female flatmate. He declined to say when he received it or whether he raised it with anyone else, including Nationals leader John Barilaro or other party members.

“I received a letter and passed it onto police that day, given the contents and my legal obligations,” Mr Johnsen said.

A NSW Police spokesman said police “conducted inquiries into the allegation” received in early December, “however no statement was provided to police. As a result, no further action is pending”.

A person who had contact with the female flatmate in the period after the September argument said she had no idea who wrote the anonymous complaint.

“Somebody’s obviously decided, who thought they knew all the facts, and sent it off to Michael Johnsen,” said the person.

Mr Rush said he decided to withdraw as the Upper Hunter Country Labor candidate despite the complaint being dismissed.

“My focus has been on the welfare of my family and friends affected by the anonymous complaint published in the Sun Herald on Sunday,” Mr Rush said.

“Weighing heavily on me over the last few days has been balancing my desire to get up every morning and to try and make the place a little better with the inevitable impact of public life on those around me. It is very difficult to see others upset by anonymous allegations published on the front page of a metropolitan newspaper.

“For that reason, I have asked the party to find another candidate for Upper Hunter. It has not been an easy decision, particularly given the seat’s margin.”

Mr Rush said he believed politics “should not be about weighing the other side down in smear but about genuine conversations about improving policy, building things, and improving people’s lives”.

“I want to thank my family, friends, volunteers and the Party Office for their wonderful support during this difficult time and encouragements to ‘hang in there’ and push on. I am absolutely proud of my team and the fact that right from the start we ran a positive solution-based campaign focused on people,” he said.

“I certainly look forward to the election of Labor in Upper Hunter and into Government in NSW.”

The Newcastle Herald confirmed the complaint was dismissed.

A NSW Labor spokesperson said Mr Rush had withdrawn his candidacy and it had been accepted.

“Labor will expedite the selection of a new candidate,” the spokesperson said.

Mr Rush’s withdrawal from the state campaign had no impact on his role as Muswellbrook mayor, said council general manager Fiona Plesman.

“Council’s management team and I look forward to working with Martin in his ongoing role as mayor,” said Ms Plesman.

The council had “complete confidence in his ability to continue to lead the council in its efforts to build an economically diverse and sustainable community”, she said.

“Martin has worked tirelessly to build a better future for our community and continues to lead the delivery of innovative programs such as the recycle water treatment works and Denman town centre revitalisation,” she said.

This story first appeared on the Newcastle Herald website.