Pat Dodson has announced he will resign from federal politics on January 26.

The decision comes amid his health battle with cancer, which saw him take a leave of absence from parliament earlier this year.

The Western Australian senator recently informed Prime Minister Anthony Albanese and Senate President Sue Lines on his intention.

Dodson was first appointed to the Senate in 2016 after lifelong advocacy for Indigenous rights.

He previously served as commissioner on the Royal Commission into Indigenous Deaths in Custody.

"It has been an honour to serve as Senator for Western Australia," Senator Dodson said in a statement on Tuesday.

Senator Dodson is widely honoured with the title of "father of reconciliation".

He thanked the Prime Minister for his support and appointment as Special Envoy for Reconciliation and Implementation of the Uluru Statement from the Heart and for leading the nation to October's Voice referendum, and former Labor opposition leader Bill Shorten for nominating him to his position in the upper house.

The decision came with consideration for his ability to continue carrying out his role.

"Regrettably, my recent treatment for cancer means that my health, although slowly improving, has left me physically unable to fulfil satisfactorily my duties as a Senator," Senator Dodson said.

"I am grateful for the professional and kindly attention of many medical staff over the past few months, and I wish to thank all those people who sent their best wishes during my absence from Parliament."

In a statement, the Prime Minister said the news "fills me with sadness – but also with gratitude".

"Patrick Dodson is a great Yawuru man, a wonderful Australian, and an excellent human being," Mr Albanese said.

"You would gladly follow him into battle yet he's made it his life's work to make peace. From the moment he entered Parliament, he has made this place a better one.

"As a boy, he hid in the long grass while the police and welfare officers took his mates.

"Yet despite what must have been such a traumatic experience as a child, he grew into the Father of Reconciliation - a figure of grace, dignity and inspiration."

Mr Albanese said it is "a measure of the man and a reflection of his commitment to 'unfinished business' that he chose to serve Australia in the Senate" in his late 60's.

"Through 7 years he has gifted every member of our Caucus his wisdom, his courage, his fearless conviction and his eternal good humour," he said.

"Through the powerful example of his own life, he has given so many of us the gift of a greater sense of perspective.

"There are few more reassuring sights in Parliament House than seeing Patrick and his hat coming down a corridor towards you."