Controversial Liberal Democratic Party Senator David Leyonhjelm announced on Monday he would leave federal parliament in coming weeks to contest the NSW state election on March 23.

Currently embroiled in a defamation lawsuit with Greens Senator Sarah Hanson-Young, Senator Leyonhjelm said he was quitting Canberra after two terms as a crossbench senator because he was more interested in state issues.

He will contest the NSW election in a bid to secure one of 21 upper-house seats for an eight-year term.

Former Labor leader Mark Latham, who was once a member of the Liberal Democrats, is running as a candidate for One Nation.

First elected to the senate in 2013 and re-elected in the double-dissolution 2016 poll, Senator Leyonhjelm is being quoted on Twitter as saying it’s likely he will quit the Senate on February 28 or March 1.

Senator Leyonhjelm told Sky News on Monday night he wanted to work on “nanny-state issues”, such as the legislation of cannabis and the removal of annoying “red-tape issues”.

“NSW is nanny-state central with its liquor licensing, anti-vaping, lockouts, bicycle helmets, anti-assisted suicide and anti-­motorcycle policies, amongst many others. It is also fast becoming a police state. These are issues close to my heart, and I want to try to do something about them,” he told The Australian newspaper.