Ms Hay has told colleagues that she will not stand "in the interests of party unity" and urged them to "support the leader" defusing a potential showdown with opposition leader Luke Foley

However, Ms Hay is still refusing to accede to a demand by Mr Foley that she resign as Whip before the meeting in light of the development.

"My position is one of principle and in the interests of procedural fairness and the presumption of innocence," she told Fairfax Media on Monday. "I've haven't budged from that".

Ms Hay was reinstated as Whip only a fortnight ago after telling Mr Foley she was no longer a suspect, following an Australian Federal Police raid on her electorate office last year.

But on Friday the AFP charged her staffer of nine years, Susan Greenhalgh, with electoral fraud offences.

Ms Hay's failure to agree to Mr Foley's demand that she resign as Whip, led him to declare on ABC Illawarra radio on Monday that he would resign if she was re-elected at a caucus meeting on Wednesday.

"I'd resign the leadership, frankly," Mr Foley said. "I don't expect that outcome. I'm very confident the caucus colleagues will accept my judgement on this matter".

It is understood Mr Foley and Labor head office are angry that Ms Hay did not tell them of the possibility that Ms Greenhalgh could be charged when pushing for her reinstatement as Whip.

Mr Foley's push for Ms Hay's resignation comes after he and the opposition demanded Liberal MP Glenn Brookes resign from parliament after his staff member, Jim Daniel, was charged in March.

Mr Daniel was issued court attendance notices following allegations by the NSW Electoral Commission that he distributed unauthorised "political campaign material" during the 2015 election in the seat of East Hills.

At the time Mr Brookes said he was "shocked and horrified" at allegations Mr Daniel distributed flyers branding his Labor opponent Cameron Murphy a "paedophile lover" during a bitterly fought contest.

Mr Brookes – the member for East Hills – announced he would stand aside from the parliamentary Liberal party and move to the cross bench while Mr Daniel – a Bankstown councillor – is prosecuted.

The Australian Electoral Commission began investigating Ms Hay's office after Fairfax Media revealed in December 2014 that a number of her supporters had updated their addresses on the electoral roll days before a pre-selection vote in Wollongong.

According to the roll, three people had moved into the home of Judita Matic​, an ally of Ms Hay and secretary of the ALP Wollongong branch.

Fairfax Media found them living at their previous addresses outside the Wollongong electorate and therefore ineligible to support Ms Hay in the pre-selection vote.