ACT leader Rodney Hide announced his resignation as leader today, endorsing former National Party leader Dr Brash to take his place.
Critics of Dr Brash, whose race-based campaign in 2005 helped National come within a whisker of becoming government, today voiced concerns about his return to politics.
Labour leader Phil Goff said the leadership change could have a devastating impact on the lives of middle and low-income New Zealanders.
"John Key has described Don Brash as an extremist. But he has also made it very clear that he is prepared to work with his former boss in a future government," Mr Goff said.
"Don Brash wants savage cuts to Government spending, including health and education. Working for Families and interest-free student loans would be gone and there would be a wholesale sell-off of our valuable community-owned state assets."
Dr Brash has indicated a preference for former Auckland mayor John Banks to take the Epsom seat, currently held by Mr Hide, which Mr Goff said was also worrying.
"A relationship involving Don Brash and John Banks, at the head of the ACT Party, will allow National to pursue all the policies it has wanted to pursue but has been afraid to admit to so far."
Green Party co-leader Metiria Turei noted Dr Brash's "extremist views on race relations" was a particular concern.
"Don Brash, as National Party leader in 2005, helped divide New Zealand with his Iwi/Kiwi Billboards," Mrs Turei said.
"Recent statements made by Dr Brash suggest that as ACT leader he will be quite happy to leverage votes from these same divisive tactics."
Mrs Turei said Dr Brash needed to come clean about who was backing his campaign, referencing the 2005 scandal in which Dr Brash denied knowing the Exclusive Brethren was running an anti-Labour/Greens campaign when the group had told him its plans.
"Dr Brash has, after all, just bought a political party as if it were a piece of plastic on a monopoly board. The public deserve to know who the banker for this operation is."
United Future leader Peter Dunne said Dr Brash's takeover would horrify most people.
"Don Brash is a rigid right-wing ideologue -- give him influence and a hand on power and watch the New Zealand we know become a harsher, more brutal place."
New Zealand First leader Winston Peters criticised Dr Brash's inconsistent race relations policies.
"Don Brash, in 2005, came into my office with the Maori Party and three other parties trying to form a government. Whatever he says now about that is refuted by his past actions," he said.
"His Orewa speech he himself disowned in 2009 at a time when he obviously didn't think he was going to go back into politics. He's all over the place."
Mr Peters said he was not concerned about how the leadership change might affect his own party's election chances.
"It's not a threat to New Zealand First because we don't represent the narrow interests of the very few which is a speciality of people like Don Brash."
The Prime Minister's office would not comment on the change of leadership, but confirmed Mr Hide would remain a minister under the confidence and supply agreement ACT had with National.
Maori Party co-leader Pita Sharples also refused to comment, saying his party did not want to be distracted by other parties' internal issues.
"Our party remains committed to our kaupapa and to progressing our issues, in line with our agreement with the National Party."
