Warren Mundine has withdrawn from the race to fill a vacant Liberal NSW senate seat.

The anti-Voice leader sparked controversy and seemingly went against No campaign agenda when he told ABC Insiders he supported treaty and changing the date of Australia Day.

He later clarified he was speaking about land use agreements.

Mr Mundine had presented as the likely candidate to take the vacated senate position of former Minister for Foreign Affairs and Minister for Women Marise Payne.

"It looks like I am going to be pulling out and I will stay in the business sector," he told Sydney Morning Herald earlier on Friday.

It has been reported that potential conflicts of interest due to Mr Mundine's business ties to federal government contracts were a consideration, given the Constitutional prohibition on candidates with such links.

Mr Mundine served as Labor Party president between 2006-07. He ended his affiliation with the party in 2012.

In the 2019 election, Mr Mundine unsuccessfully ran as a Liberal candidate for the federal seat of Gilmore on the NSW south coast.