Ms Burney, who served as Indigenous Australians Minister, and Skills Minister Brendan O'Connor will step down at the next federal poll, due by May 2025, with the government to announce a pre-election reshuffle.
Both overcame personal tragedies to serve decades in parliament and gave an emotional farewell alongside the prime minister.
Linda Burney and Brendan O'Connor have made an outstanding contribution to our nation.— Anthony Albanese (@AlboMP) Today, they have announced they will retire at the next election. They will also step down as Ministers. pic.twitter.com/NYsnMxB9svJuly 25, 2024
Ms Burney was the first Indigenous person in the NSW parliament, the first Indigenous woman in the House of Representatives and the first to hold the Indigenous Affairs portfolio.
"But I won't be the last - to me, that is progress and it's time to hand the baton on," she told reporters on Thursday.
On the failed referendum for an Indigenous voice to parliament, Ms Burney said there were silver linings in millions of Australians voting 'yes'.
She gave her all to reconciliation.
"I was in Redfern in 1993 when Paul Keating made his Redfern speech, on the Sydney Harbour Bridge in 2000 for the walk for reconciliation," she said.
"I was in the chamber when Kevin Rudd made his apology on behalf of the Australian people in 2008.
"I've seen a lot, and let me tell you that progress doesn't always move in a straight line but with every passing generation, the arc bends a little bit more towards justice.
"I've done my bit and the time for the new generation is now."
Anthony Albanese said the resignations provide an opportunity to renew his frontbench. (Mick Tsikas/AAP PHOTOS)
Her work in the portfolio left a legacy for Indigenous people to follow, the chair of First Nations organisation Children's Ground William Tilmouth said.
"She has shown strength, dignity and commitment to our people and in her efforts towards improving First Nations justice," he said.
"Being the first to break down political barriers is not easy - it is trailblazing."
Opposition spokeswoman Jacinta Nampijinpa Price said Ms Burney "has been driven by a burning desire to improve the lives of Indigenous Australians".
Ms Burney had a tumultuous time in politics following the death of her 33-year-old son Binni Kirkbright-Burney in 2017.
"I have been through more than my fair share of life's ups and downs but I think I've done it with kindness, grace, resilience, intelligence and integrity," she said.
Mr O'Connor also overcame tragedy after his wife Jodi Dack died in 2018.
Anthony Albanese is expected to dump Andrew Giles as immigration minister. (Thomas Parrish/AAP PHOTOS)
He thanked colleagues and reflected on his decades in parliament, saying he planned to spend more time at home with his daughter Una.
"If she wasn't so resilient and remarkable, I would have left the place long ago," he said.
A revised ministry will be announced in Canberra on Sunday and sworn in on Monday after Labor factions put forward their picks.
Andrew Giles is expected to be sacked as immigration minister after coming under fire for his handling of a High Court case that led to the release of more than 150 immigration detainees.
A factional ally and friend of the prime minister, Mr Giles is expected to be moved sideways rather than be dumped from the outer ministry.
Indigenous senator Malarndirri McCarthy is tipped to be elevated into cabinet to replace Ms Burney, leaving one more Left faction place.
Mr Albanese's confidant Pat Conroy is regarded as next in line to be brought into cabinet, which would open up a spot in the outer ministry.
Assistant ministers Tim Ayres, Jenny McAllister and Anthony Chisholm are in the mix for a promotion.
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