Mr Downer won praise from UN Secretary-General Ban Ki-moon for playing an ''indispensable role'' since 2008 in efforts to resolve the longstanding separatist dispute between Greek and Turkish Cypriots.

Leaders of the two communities issued a joint declaration overnight to again launch negotiation for a settlement to the Cyprus dispute.

Mr Downer told Fairfax Media on Wednesday that the statement was a long way short of a solution but marked one of the best agreements since the 1974 conflict that separated the island country.

He said after more than five years of intense travel in the part-time envoy role, the declaration marked a juncture for him to step back.

''It's been fascinating, a hugely complex and difficult issue,'' Mr Downer said.

Mr Downer said he had no interest in a return to parliamentary politics but would devote himself to his other positions, including a consulting company, teaching at the University of Adelaide and as South Australia's Liberal party president in the run-up to a state election.

There had been persistent speculation that the Abbott government might ask him to take a diplomatic post representing Australia, with Washington most often mentioned.

''If any of those jobs came my way, I'd make a decision, but it would mean giving up my other jobs,'' Mr Downer said.

Mr Ban said in a statement that Mr Downer had shown perseverance and commitment over the past five and a half years. The envoy role meant Mr Downer spent up to 10 days a month shuttling between Nicosa, Athens, Ankara and New York.

He has been variously criticised inside Cyprus over the years for his approach to negotiations, but Mr Downer said the job has been a huge undertaking and flak was bound to be acquired along the way.

He will travel to New York next month for a concluding discussion on the peace talks with Mr Ban.