"I believe this is the right moment to leave the programme and concentrate my energies in other directions," said Kilroy-Silk on Friday, a former Labour Party member of parliament.
The BBC had suspended his long-running Kilroy topical discussion show after the Sunday Express newspaper published an article by him headlined "We owe the Arabs nothing".
In the article he asked: "What do (Arabs) think we feel about them? That we admire them for being suicide bombers, limb amputators, women repressors?".
The Muslim Council of Britain, which had condemned Kilroy-Silk over the article, welcomed his departure.
"We hope today's landmark decision by the BBC will send out a clear signal that anti-Arab racism is every bit as unacceptable, every bit as odious as any other form of racism," the council's secretary general Iqbal Sacranie said.
Kilroy-Silk had swiftly apologised for any offence the article might have caused, claiming it had been re-published in error and had prompted no reaction when it first appeared in April last year.
But he also defended his right to speak his mind, telling one newspaper: "If I am not allowed to say that there are Arab states that are evil, despotic and treat women abominably, if I am not allowed to say that, which I know to be a fact, then what can I say?"
The BBC denied they were gagging Kilroy but said his views made him unsuitable as the host of a discussion programme.
"Presenters of this kind of programme have a responsibility to uphold the BBC's impartiality," Jana Bennett, the BBC's director of television. said.
"This does not mean that people who express highly controversial views are not welcome on the BBC but they cannot be presenters of a news, current affairs or topical discussion programme."