English said he had been reflecting over summer on his decision, and would embark on "new personal and professional challenges".
He would resign and leave Parliament on February 27 to give National's new leader the time to prepare for 2020.
English said it had been a privilege and honour serving in Parliament for the past 27 years.
English said his proudest achievements included social investment and handling the New Zealand economy through the Global Financial Crisis.
He thanked the public for the support they had given National, and thanked his colleagues and the National Party.
"I've been fortunate to be able to come to work every day with a sense of mission.
"To our supporters, thank you for keeping the faith through nine years of successful government and through that change of government."
English got emotional when thanking his family, saying their "strength and tolerance" enabled his career.
Resigning was not a concession of defeat to Labour leader Jacinda Ardern, he said, and he believed National could be successful in 2020. "I'm handing over the party in as strong a position as it could be."
English will remain leader until his resignation takes effect on February 27. He would not say who his preferred successor was.
The decision to resign crystallised over summer, a time English said was the first time in a long time he had not faced political concerns. He said his family had spent most of their lives with the demands of politics, and he had decided he wanted to give them some time without it.
Deputy Paula Bennett and finance spokesman Steven Joyce learned of his decision a week ago.
English said his caucus had done him "an enormous favour" by allowing a clean handover after former Prime Minister John Key quit and he hoped the handover from him would be as tidy.
English had not told caucus his decision at the retreat last week because he had not wanted to distract from the main aim of that meeting, which was strategy and political development, he said.
He also said he would cast a vote on the leadership. "And I look forward to them coming to me to ask for it after years of having to ask for it myself."
Asked at what clear moment he had decided to go, he joked it was "sitting on the couch at Dipton looking out at the scenery and thinking 'wouldn't it be great if I didn't have to answer media questions?'"
"What matters in politics is you be satisfied yourself with what you do."
There had been "ups and downs", he said, but no regrets.
Although he was given Key's endorsement, he had decided it was for caucus to pick the new leader.
As for the future, English said he would pursue personal and business interests.
"I"m pretty open to all those opportunities."
Asked if a return to farming was possible, he replied: "I'm certainly going to spend more time back in Dipton. Whether they would think my skills were useful and relevant is another question."
English said he had told caucus that what National had over the past decade was "not normal in politics" and they should strive to maintain that stability. He said tearing itself apart was "a recipe for staying in Opposition".
He hoped the economy would stay strong and Labour would not dismantle the social investment approach, identifying and targeting the vulnerable in society.
He said he did not want to prejudge whether a change of leader would make it easier for National to deal with NZ First or other possible support partners in 2020.
Robert Muldoon was leader when English entered Parliament and it was a "rambunctious" place "in which the leader of NZ First thrived". He said such instability and lack of discipline would be fatal for a party today.
National MPs including English's close friend Nick Smith, deputy leader Paula Bennett and front bench colleagues Anne Tolley, Gerry Brownlee and Steven Joyce were alongside English as he made his announcement.
Of the likely leadership contenders, only Judith Collins managed to fit into the room - Simon Bridges was in Tauranga because of travel delays.
Prime Minister Jacinda Ardern praised English and wished him well.
"Bill has worked tirelessly as Prime Minister, Deputy Prime Minister, Finance Minister, and Opposition leader among his many public roles. Very few serve for so long at such a high level, but garner the respect of many," Ardern said.
"He has always stood for what he believes in. He is a man of clear convictions who has always had a genuine concern for the well-being of New Zealanders, and gave a huge portion of his working life to serving on their behalf.
"The impact of public service on a politician's family cannot be understated. In the 27 years Bill served as an MP, with the support of his wife Mary, his children were born, and grew up. They have made great sacrifices so he could do his job to the best of his ability.
"I wish Bill and his family all the best for the future."
Maureen Pugh is next on National's list and is expected to return to Parliament as an MP.
A former Westland mayor, Pugh served as an MP in the previous term when she replaced senior minister Tim Groser, who left to take up the role as Washington ambassador.
The sudden news that Bill English is stepping down is bitter sweet for me being next on the List. He has made an enormous contribution to NZ over many years, esp during the GFC.
Pugh thought she had made it back to Parliament on election night last year but lost her spot after the special votes were counted.
She attended last week's National Party caucus meeting in Tauranga and said she would take up the chance to return to Parliament if a position came up.
"It's been an enormous privilege to serve New Zealanders since being elected to Parliament in 1990.
"Over 27 years I have been privileged to work alongside so many people to improve our country. I am proud of the innovative work done as a Health Minister in the 90s, and then as Finance Minister through the GFC, helping to stabilise and grow the economy and to rebuild Christchurch.
"In recent years I enjoyed the development of Social Investment and new ways of the Crown working with Māori to make a real difference, and I was honoured to lead New Zealand as Prime Minister.
"National's two-day caucus meeting last week confirmed to me that our team has the talent, the ideas and the energy to return to government in 2020. It's important that National's new leader has the time and the best possible opportunity to achieve that.
"So I believe now is the right time to step aside and to embark on new personal and professional opportunities.
"I've served with some outstanding politicians and I want to thank my Parliamentary colleagues and the National Party for the trust and support they have given me.
"I'm also indebted to the people and communities of Clutha-Southland - and before that Wallace - who sent me to Parliament and kept me grounded for so many years.
"To our supporters, thank you for keeping your faith in us through nine years in Government, and through the change of government. I know that our MPs will continue to represent your ambition for New Zealand.
"Most importantly I would like to thank my family. Mary and our children, Luke, Thomas, Maria, Rory, Bart and Xavier.
"For all our time together we have lived with demands of public service. Your strength and tolerance has enabled my career. You have been my inspiration and pride and I now look forward to a new life together."
Police have received more information on the homicide of two people in South Dunedin last month, but are yet to lay further charges.
Investigators in the Wesley St double homicide last week promised "identity protection" for anyone who came forward with further information, in a bid to boost their collection of evidence.
The bodies of Anastasia Margaret Neve, 35, and David Ian Clarke, 49, were found inside the South Dunedin house on January 22, after it was set alight.
Police have said evidence suggested they died before the fire started, and they were treating the deaths as a double homicide.
A 46-year-old Dunedin man accused of burning down the house was late last month granted interim name suppression and remanded in custody by consent. The man was known to the couple.
A police spokeswoman said more people had come forward offering information after last week's request.
None had requested protection of their identities. No additional charges had been laid.
One competitior was in tears at the top of the course, another described the slopestyle snowboarding event at the Winter Olympics as a s***show.
Twenty-four others tried. They each took two rides down a diabolical course. They battled wind, they teetered and toppled, they fell and skidded and bounced. Most failed to complete their runs without crashes. The lucky ones finished by playing it safe.
And then there was American Jamie Anderson, who on Monday at the Pyeongchang Games did what other female snowboarders could not: make it look like the weather wasn't a problem.
Anderson towered over the field, winning Winter Olympics gold in slopestyle snowboarding - the U.S.'s second gold medal of these Games after Red Gerard won the men's slopestyle event Sunday. Anderson defended the gold she had first won at the Sochi Games in 2014.
Anderson didn't even need her second and final run - the last of the day - to clinch. By then, the 24 others had each gone twice, and nobody had scored higher than 76.33. Anderson had been awarded an 83.00 on her first run, and then watched for another hour as the world's best snowboarders were bedeviled by the weather.
Temperatures at Phoenix Snow Park were in the low teens, and more important, winds whipped at 15 mph. Some snowboarders said the International Olympic Committee made a mistake by holding the event.
"I'm not happy about it being run," said Cheryl Maas of the Netherlands, who placed 23rd.
"It's not just me, it's everybody landing on their ass. It sucks not seeing 1080s. It was just a s***show."
Anderson, 27, had fretted earlier this week that the game was progressing right past her. She saw younger riders doing more daring tricks. Even after Sochi, she thought about retirement. But ultimately, in these conditions, it was her experience that came in handy.
The path she took along the course was a conservative one, with pared-back jumps. It served her well. During the first heat of runs, only three snowboarders didn't fall, and Anderson vaulted into first place - a lead she would keep.
Laurie Blouin of Canada and Enni Rukajarvi of Finland claimed silver and gold.
"The conditions helped the more experienced riders," Anderson's brother, Luke, said while celebrating with his family at the bottom of the course. "And she's so competitive. She likes to win."
When Anderson found out she'd won, she was standing atop the course, with no one left who could top her first score. The second-to-last snowboarder of the day, American Julia Marino, had posted a 41.05.
Anderson rocked her head back and raised her hands in celebration.
She had a victory lap ahead of her. She could have walked down the slope and still won.
As it happened, her victory lap was a fitting one: Midway through the course, she took her first big jump and caught a gust of wind. Her arms started helicoptering. She went bottom down into the snow.
That image fit with the day. More than half of the riders never earned a score above 50, including Anna Gasser of Austria, one of the world's top snowboarders, who placed 15th.
"I don't think it was a fair competition," Gasser said. "I'm a little disappointed in the organisation," the IOC. "I think they should have canceled. So many people got hurt."
Indeed, the event had already been warped by weather. Under normal circumstances, the final day of ladies' slopestyle would have consisted of three runs. The field competing in those runs would have already been trimmed in an earlier day of qualifying.
But Sunday's qualifying run was canceled because of weather. So instead, everybody made the finals - and had two runs, not three, to prove themselves.
"It's not the best display of women's snowboarding," said Aimee Fuller of Great Britain, who finished 17th. "It was totally a case of survival. I took a hard slam myself. It literally felt like the wind got my board and pulled the board from my feet."
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Winds of up to 195km/h hit Tonga overnight and strong winds are still battering the country
Unconfirmed reports say one is dead and a number injured
Cyclone described as the strongest to hit Tonga in its history.
Some estimates says 75 per cent of homes in capital Nukuʻalofa destroyed.
Fresh water and power are out in many areas.
New Zealand Defence Force planes and emergency response teams are on standby
If you're a Kiwi in Tonga and require consular assistance contact the NZ High Commission on (00676) 23122, (00676) 881 7022 (after hours) or email@example.com
The extent of the destruction in Tonga caused by Cyclone Gita is starting to emerge.
The storm tore through the country overnight, injuring people and destroying buildings. Tonga's parliament house is one of the buildings destroyed.
A spokesman for Tonga's Emergency Management office told Newshub they have reports of one death, but it cannot yet be confirmed because communications are down.
Graham Kenna told Newstalk ZB's Mike Hosking there was an extreme amount of damage in capital Nuku'alofa's CBD.
He said a lot of heritage buildings in the town had been severely damaged or destroyed.
Kenna said about 800 families were sheltering in evacuation centre. All were safe.
He described the storm as "frightening". He was on the third floor of one of the strongest buildings in Nuku'alofa all night and it was shaking and being continually battered by flying debris.
His Majesty's Armed forces started clearing the roads around the hospital from about 2am.
A number of people are injured and in a woman in labour had to be rushed to hospital.
Kenna said it was still dangerous in the area. Strong winds were blowing tin around from buildings.
Kenna expected power would be out for a number of days and that many people's water tanks would have been damaged.
He told Radio New Zealand that one of the Catholic churches was completely gone and others were damaged.
"We've had hundreds of calls during the night for assistance for trees down on houses and people trapped in houses," he said.
"I've had phone calls through the night from people who were trapped and wanted help that we just weren't able to offer. We couldn't put lives at stake to go out in such atrocious weather."
Kenna told RNZ that staff from the emergency management office would head out to help people and assess the damage as soon as it was safe.
"We'll start in the city and then we'll fan out into the countryside and get a full grasp by mid-afternoon on what the needs are going to be."
New Zealander Joanna Bourke, who lives in Tonga, said she was "fearing the worst".
She told Newstalk ZB Early Edition host Kate Hawkesby that the night was "horrible" as the cyclone "roared".
Tonga had been badly hit, she said, although she would have to assess damage to her own home after dawn.
She had looked outside with the use of a torch and "it didn't look good" with of wood everywhere, coconut fronds and fallen trees.
Bourke described herself as a tough cookie, but conceded that when the cyclone was roaring through, she was scared.
Polynesia country director for Oxfam, Jane Foster, told Newstalk ZB that providing access to clean water will be a priority.
Many residents rely on water tanks, which have been damaged or destroyed in the category four storm overnight. Oxfam has water filtration systems ready for use.
New Zealand's Ministry of Foreign Affairs and Trade emergency management team and Defence Force aircraft were at the ready, Prime Minister Jacinda Ardern told TV3's The AM Show today. Officials were waiting for first light so the damage can be surveyed.
"We will be waiting for the Tongan government to tell us exactly what their needs are, as soon as they are able, and then we can essentially kick in our response as soon as possible," Ardern said.
Locals were already out and starting to clean up. Residents were using chainsaws and machetes to get rid of fallen trees and debris.
MetService forecaster Matthew Ford told Newstalk ZB Cyclone Gita is now expected to track south of Fiji's main island of Viti Levu.