Éamon Ó Cuív has resigned as Fianna Fáil's Deputy Leader and Communications Spokesperson.
In a statement, party leader Micheál Martin said he had accepted Mr Ó Cuív's resignation from these positions.
Mr Martin said: "Éamon's refusal to support the parliamentary party's position on the Fiscal Compact meant that it was no longer feasible for him to occupy these roles."
It is understood that Mr Ó Cuív has also withdrawn his name from the race to become Vice President of Fianna Fáil.
Following the announcement that Mr Ó Cuív was resigning from the party's front bench, Mr Martin said he expected Mr Ó Cuív to win a position as Vice-President of the party at this weekend's Ard Fheis.
Deputy Ó Cuív was one of seven candidates for the five positions as Vice-President.
Asked how this would reflect on his leadership of the party, Mr Martin said that it would have no effect.
He said he would not be appointing a new deputy leader in advance of the Ard Fheis.
Speaking on RTE's Six-One, Mr Ó Cuív said that Mr Martin rang him at 4pm today, saying he was to resign and was no longer a member of the front bench.
Mr Ó Cuív said the Taoiseach should "go back" to Brussels to get concessions for Ireland before the treaty could be passed, including a "writedown of banking debt".
Deputy Ó Cuív said he would remain a member of Fianna Fáil, but he could not "knock on doors" seeking support for the treaty as it stood.
Also speaking on Six-One, Mr Martin indicated that Mr Ó Cuív is facing expulsion from the parliamentary party if he does not vote with the party on the Fiscal Compact in the Dáil.
Mr Martin said he spoke to his now former deputy leader last night after comments made on TG4. Both men spoke again today.
He said Deputy Ó Cuív told him he had "fundamental" problems with the treaty and could not back it in the Dáil or campaign for it.
Mr Martin described Mr Ó Cuív as a "distinguished" member of Fianna Fáil but said clear guidelines dictated he would be expelled from the parliamentary party if he voted against its position on the treaty, though he would remain a member of Fianna Fáil.
Fianna Fáil TD Billy Kelleher this evening said it was important for the party to have one voice on the treaty referendum.
Earlier, Mr Ó Cuív had clarified his position on the referendum.
Speaking on RTÉ Raidió na Gaeltachta, he said he had to decide whether he could go with the party stance, if that were to vote in favour of the referendum, or whether the question was so grave that he would have to go against the party.
He said the implications of that decision would mean leaving the parliamentary party.
Although Mr Martin last night said the party would support the referendum, Mr Ó Cuív said that, to his understanding, discussions were still ongoing within the party on the matter.
Yesterday, the Government confirmed that a referendum will be held on the EU Fiscal Stability Pact, following advice from the Attorney General.