Kelly will leave his role on Derrry City and Strabane Distrcit Council as an elected representative for the Moor ward.
The party’s housing spokesperson will take up a new backroom role within Sinn Féin in Derry.
Sinn Fein is to now start the process of choosing his successor.
Cllr Kelly has recently been helping spearhead a party campaign to have an Irish passport office located in the North of Ireland.
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