Fianna Fáil's candidate Jim Gavin has announced he is withdrawing from the Presidential Election "with immediate effect".
In a statement, he said recent days gave him "cause to reflect".
Mr Gavin said: "I made a mistake that was not in keeping with my character and the standards I set myself. I am now taking steps to address the matter.
"I have also thought long and hard about the potential impact of the ongoing campaign on the wellbeing of my family and friends.
"Taking all these considerations on board, I have decided to withdraw from the presidential election contest with immediate effect and return to the arms of my family."
It follows reports that Mr Gavin owes a former tenant €3,300, as reported by the Irish Independent on Saturday.
Last night, Taoiseach Micheál Martin said he fully understands Mr Gavin's decision and believes "it is the correct one".
The Fianna Fáil leader said: "Jim has accepted that he made an error in relation to an issue that has arisen in recent days.
"He himself has said the office of Uachtarán na hÉireann is the highest in the land and the pinnacle of public service.
"He is clear that he does not want to bring controversy onto this office.
"This has been a very difficult decision for Jim given his commitment to public service."
Presidential candidates Catherine Connolly and Heather Humphreys both wished Jim Gavin well following his decision to withdraw.
Catherine Connolly said: "Anyone who seeks to make Ireland a better place through public service should be commended.
"Jim Gavin has made the right decision for himself and his family. I wish him well."
Heather Humphreys said: "Jim Gavin has made an enormous contribution to our country. He served in the Defence Forces with distinction and his achievements and the groundbreaking changes he pioneered in Gaelic Football are a legacy which will stand the test of time for all those who love our national games.
"While I know this must have been a very difficult decision, it is clearly one Jim has made with the best interests of his family at heart.
"That is something all of us can relate to. I want to wish Jim and his family all the very best for the future."
Analysis: Fianna Fáil in crisis with Jim Gavin's withdrawal from presidential race
Jim Gavin's statement in full
"When I announced my intention to contest the presidential election I did so in a spirit of lifelong public service and a love of country. That has always been my sole motivation.
I believe deeply in this country, its dreams, its hopes and above all its people. The office of Uachtarán na hÉireann is the highest in the land and the pinnacle of public service. It is an office that must be untainted by controversy or distraction.
I always knew the campaign would be robust and challenging and anyone who knows me knows that I have never shirked from a contest. I have always sought to act in honour and good faith.
However recent days have given me cause to reflect.
I made a mistake that was not in keeping with my character and the standards I set myself. I am now taking steps to address the matter.
I have also thought long and hard about the potential impact of the ongoing campaign on the wellbeing of my family and friends.
Taking all these considerations on board, I have decided to withdraw from the presidential election contest with immediate effect and return to the arms of my family.
Throughout this campaign I have been humbled by the encouragement and kind words I received. So many people have gone out of their way to support me in so many ways, and I would like to express my sincere thanks to them. I truly hope you understand my decision and do not feel let down.
Go raibh míle maith agaibh."
Yesterday, Mr Gavin said he was looking into reports he owes a former tenant €3,300, but that he did not have "all the information" about the matter.
It relates to a dispute with a former tenant around the time his own family came into financial difficulty, as reported by the Irish Independent on Saturday.
It was reported that an apartment owned by Mr Gavin in the north inner city was occupied by a couple between 2007 to 2009. When they left, their rent payment by standing order was still being paid into Mr Gavin's account due to a banking error, despite the tenant having cancelled the standing order.
The former tenant told the newspaper that he wrote to Mr Gavin that €3,300 in total was paid to him in error, asking him to acknowledge the mistake made by the tenant and to refund him.
However, the tenant claimed that the refund was never paid to him, despite numerous attempts to contact Mr Gavin, as per the report.
Speaking during RTÉ's live Presidential Election debate, Mr Gavin said: "That matter was over 16 years ago. It was a very stressful time for myself and my family.
"Like a lot of families and couples, we came into financial difficulty at that time."
Mr Gavin said: "If it happened, I'm very sorry that it happened. I’m looking into it and I will deal with it with urgency."
Speaking after the debate, Mr Gavin said he was still "gathering the data" on the incident, saying it was "part of my life that I left behind".
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The Fianna Fáil candidate said his family only own one property now, which is their home.
He said that he did not register the rented property with the Residential Tenancies Board, but added that "it was a new law at the time" and "the majority of people didn't register [properties] at the time".
He said he has declared all his income.
Additional reporting PA
