The Scottish politician said it was time for fresh leadership as he confirmed his decision not to stand again at the Westminster group's annual general meeting next week.
The move - which comes after a turbulent few months for Blackford, who has faced plotting from within SNP ranks - is seen by some in the party as a blow to the authority of Nicola Sturgeon, Scotland's first minister, after her closest aides tried to keep him in post.
SNP insiders said Blackford had agreed to quit after aides became aware that Stephen Flynn, the Aberdeen South MP, had the necessary support among Westminster colleagues to oust him.
Some MPs are understood to be rattled by Sturgeon's decision to turn the next general election into a de facto referendum on independence after the supreme court ruled that only the UK government could allow another poll.
Blackford has faced several attempts by his MPs to force him out after a testing year in which he had to defend himself against bullying allegations from an aide and was accused of mishandling sexual harassment claims against Patrick Grady by a young member of staff.
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