Mr Hide stepped down today and endorsed the 70-year-old former National Party leader, who launched a leadership bid at the weekend.
Mr Hide maintained he made the decision based on what was best for the party -- however it does appear he no longer had majority support in the five MP caucus.
The ACT leader in recent years struggled with internal ACT ructions and revelations of his controversial spending of taxpayers' money on travel and questions about his judgement.
Today Mr Hide agreed that ACT would do better under Dr Brash than he.
"ACT needs to step up to the next level to ensure not just centre-right government but a good strong centre-right government... I think Don Brash can get that step up," he told NZPA.
Mr Hide said once Dr Brash went public with his leadership aspirations at the weekend he made his own assessment and decided to avert a damaging and drawn out process by standing down.
"I didn't run around fighting it or trying to do the numbers... The crucial vote was mine really. I then didn't need to canvas the support of MPs."
ACT MPs Heather Roy and Sir Roger Douglas have made no secret of their disapproval of Mr Hide's leadership. John Boscawen was loyal to Mr Hide but newbie Hilary Calvert's support wavered.
Mr Hide would have seen the writing on the wall when Ms Calvert met Dr Brash yesterday.
She told NZPA that she had not communicated with Mr Hide nor Dr Brash about what her position was but felt Mr Hide had made the best decision for the party.
"I think we've moved on from anybody earlier in the week's position and Rodney's made a choice and moving forward from that I think we've got some exciting times ahead."
Dr Brash, who says Mr Hide's brand is damaged, also wants to strip him of Epsom, giving his blessing to former Auckland mayor and National Government minister John Banks.
"I want ideally someone standing in Epsom who can not only win it but be seen to win it months in advance and I see that John Banks could do that."
Mr Banks has said he's keen on the idea and would stand if he had the backing of the board as well as Dr Brash.
In fact Dr Brash thinks Mr Hide should leave Parliament altogether.
Mr Hide said he would not be making hasty decisions about his future and it was up to the party who stood in Epsom. He would remain in Parliament until the election and continue in his ministerial responsibilities.
"Ultimately I've got to get through this, concentrating on the transfer of leadership and the maintenance of the Government and then I can start reflecting on that and talk to the party."
A caucus meeting will be held on Saturday to decide the leadership and a board meeting will follow to endorse its decision.
Dr Brash said he would be honoured to take on the job and intended to put pressure on the Government over its borrowing and spending.
He praised Mr Hide's efforts at the helm, which he took in 2004, and said their friendship of 15 years had been put under strain but that happened in politics and he believed he could get a stronger than 5 percent vote for ACT.
"I want to save the party, not kill it."
Prime Minister John Key this week said he could work with Dr Brash but found some of his views extreme. That might be harder for the Maori Party given Dr Brash's past racially divisive speeches.
Mr Hide said he had assured Mr Key the confidence and supply agreement ACT has with the Government was safe and a spokesman for the Prime Minister said that the agreement had not changed so Mr Hide could continue as a minister.
