Sam Dastyari has been "utterly compromised" and can no longer continue to serve in the Australian parliament, Foreign Minister Julie Bishop says.
The Labor senator has been sacked from two Senate leadership roles over his involvement with a Chinese political donor and defiance of party policy on the South China Sea.
Federal Labor leader Bill Shorten admitted he had lost faith in the one-time powerbroker but was confident Senator Dastyari hadn't broken any law and was not a security risk.
Ms Bishop, however, says the matter isn't over and called for his resignation.
"Sam Dastyari is utterly compromised," she told Sky News on Friday.
"He can no longer continue as a senator in the Australian parliament. He has compromised his own position in the most obvious and dramatic way."
Senator Dastyari made two statements to parliament to explain himself on Thursday. However, he didn't deny reports he told Huang Xiangmo to leave his phone inside when they met at the businessman's Sydney mansion last year because of likely bugging by Australian intelligence agents.
Ms Bishop said that wasn't a one-off case of poor judgment but part of a pattern of questionable behaviour.
"He risks doing damage to Australia's reputation overseas," she said.
"He's hopelessly compromised and he cannot remain in the Senate."
Senior Labor frontbencher Chris Bowen said Senator Dastyari was a loyal patriotic Australian and has twice paid the price for his mistakes.
"He will be paying a price for those mistakes for some time," he told ABC radio.
"His career has suffered a very considerable setback. He accepts that."
