Labor Senator Sam Dastyari has announced he will step down from the opposition frontbench following his expenses controversy.

Last week it emerged that Mr Dastyari had asked a company called Top Education to pay a $1670.82 personal expenses bill for him, amid other payments, including legal fees.

“It’s not fair to him [Bill Shorten] or to the millions of people who rely on Labor for my personal issues to distract from the bigger fights that we face,” Mr Dastyari said.

“I made a mistake and I’m paying the price … the Labor Party owes me nothing and I owe the Labor Party everything.

“I fell short of the duty I owe to the people I am so proud to represent.

“I accept that and I’m here to make it clear I accept the consequences.”

Other payments were made by the Yuhu Group, a subsidiary of a state-linked operation based in China, and the Australia China Relations Institute.

While not illegal, Mr Dastyari has been criticised for asking for the payments because he allegedly made comments supporting China’s position on the South China Sea, at odds with Labor’s position.

Top Education Institute’s principal is Minshen Shu, an Australian-Chinese businessman with links to China who has frequently donated to both sides of Australian politics.

“I will continue to serve with pride as a Senator for New South Wales and I look forward to serving a Labor Party government in the fear future in whatever capacity I can,” he said.

Mr Dastyari forfeits his role as manager of opposition business in the Senate, which he began after the July election.

The Coalition has strongly attacked Mr Dastyari for his actions, while Labor has been adamant the mistake is an example of why Australia’s political donations system needs an overhaul.