Federal Labor leader Bill Shorten accepted Senator Dastyari's resignation on Wednesday, one day after declaring his "junior senator" deserved a second chance.
The NSW senator admits he made a mistake asking a donor with links to Beijing to foot the $1600 travel debt.
"I'm here to make it clear I accept the consequences," he told reporters in Sydney on Wednesday.
He acknowledged the saga had become a distraction - one latched onto by senior government ministers who have been out in force calling for his head.
"The last thing a government as bad and divided as this one deserves is a free pass," he said.
"I refuse to be the reason they escape proper scrutiny."
Prime Minister Malcolm Turnbull has accused Senator Dastyari of taking "cash for comment", linking the payment to reports he presented a contrary view to his party on the territory dispute in the South China Sea.
Senator Dastyari denies the payment influenced his stance on the dispute, saying he either misspoke or was misquoted in reports he argued Australia should remain neutral and respect China.
He insists he backs Labor's position on the South China Sea.
The shadow consumer affairs minister and leader of opposition business in the Senate said he'd reflected on his 25-minute press conference designed to stop the questions on Tuesday and decided it "wasn't enough".
"I made a mistake and I'm paying the price," he said on Wednesday.
Senator Dastyari thanked Mr Shorten for his "incredible support" before vowing to continue serving as a NSW senator.
"The Labor Party owes me nothing and I owe the Labor Party everything," he said.
"I look forward to serving a Labor Party government in the near future in whatever capacity I can."
The move followed continuing calls for Senator Dastyari's resignation on Wednesday, including from Treasurer Scott Morrison and former prime minister John Howard.
Mr Howard warned Senator Dastyari's continued presence on the frontbench was damaging Mr Shorten's team.
Mr Morrison insisted the senator would have needed to have an "intense" relationship with the donor to be able to ask him to pay off his debts.
"You would only ring someone who you knew very, very well and who you thought was going to say yes," he said.
The saga has reignited the debate about whether to reform the political donations system, including banning foreign donors, something the prime minister and other senior government figures aren't ruling out.
Dastyari likely to bounce back
A burdened Sam Dastyari will be retreating to the back rows of parliament on Monday, but it's unlikely his political back seat will last long.
Relinquishing his frontbench spot after asking a Chinese donor to foot a personal travel bill is a blow - but probably not one that will take him out of the game.
He's young, media savvy and ambitious and he's got the backing of the party leader Bill Shorten - who stood in front of a media pack earlier this week declaring he deserved a second chance.
That support didn't waiver once he accepted the senator's resignation.
"He has a lot more to offer Labor and Australia," Mr Shorten said in a statement shortly after Senator Dastyari announced he'd quit.
"Sam is a young bloke with a bright future ahead of him."
The 33-year-old Labor stalwart has been with the party since his teens and was elevated to NSW Labor general secretary before his 27th birthday.
And what he did wasn't illegal, nor outside parliamentary rules.
"I made all the necessary disclosures and what I did was within the rules but it was wrong," he said.
"I fell short of the duty I owe to the people I'm so proud to represent."
But stepping down was a move he probably had to make.
The NSW senator has topped the headlines this week, even grabbing Prime Minister Malcolm Turnbull's attention from the G20 summit all the way in China.
The prime minister accused Senator Dastyari of 'cash for comment' - linking the payment to reports the senator had given a view contrary to Labor policy on the territory dispute in the South China Sea.
Senior government figures also latched on to the personal payment - dubbing him "Shanghai Sam" - perhaps to avert attention from an embarrassing series of vote losses in last week's parliament.
"It's clear to me now that this has become a distraction," Senator Dastyari said while announcing his resignation on Wednesday.
"The last thing a government as bad and divided as this one deserves is a free pass.
"I refuse to be the reason they escape proper scrutiny."
A ministerial rebirth isn't unprecedented.
Former Liberal assistant treasurer Arthur Sinodinos notably stepped down in 2014 amid an investigation by the NSW independent commission against corruption.
Two years on, he enjoys a spot in the Turnbull government's cabinet as its secretary.
Senator Dastyari is a prominent figure in the halls of parliament house, often found schmoozing journalists or with his phone attached to his ear.
He admits he's never been afraid of the spotlight and is quick to offer comment to media.
The NSW senator spent the eight week 2016 federal election campaign guiding the "Bill Bus" around the country, speaking to voters, party members and media.
He's often referred to as a Labor powerbroker and that's why a story days out from the election alleging he'd shifted support from Mr Shorten to Anthony Albanese ruffled feathers - even though he publicly denied it.
But he's also earned his audible voice in politics by crusading against the influence of big corporations and multinational tax avoidance.
His "mistake" could make that crusade a bit trickier.
However, Senator Dastyari says he's accepting the consequences and will continue to serve as a NSW senator, for now.
"I look forward to serving a Labor Party government in the near future in whatever capacity I can," he said.
