The move comes amid speculation of a possible alliance between the Congress and the AAP for the 2019 Lok Sabha polls.
In a tweet, Phoolka said he will explain the reason behind his decision in a press briefing in Delhi on Friday.
'I have resigned from AAP & handed over resignation to Kejriwalji today. Though he asked me not to resign but I insisted. Will be briefing media tomorrow at 4pm at Press Club, Raisina Rd, New Delhi to explain the Reason of leaving AAP & my further plans,' he wrote on Twitter.
In October, the lawyer-turned-politician had resigned as an AAP MLA -- he represented Ludhiana's Dakha constituency -- to press for immediate action against those accused in the sacrilege cases that rocked Punjab in 2015.
He had quit as a lawmaker claiming that the Congress government in Punjab had not taken desired action against those named in the Justice Ranjit Singh Commission report on the sacrilege incidents.
The AAP has not trashed alliance prospects with the Congress, saying its political affairs committee will take a call after considering opinions of its leaders and workers from Delhi, Punjab and Haryana.
Phoolka had also resigned as the Leader of Opposition in the Punjab assembly so that he could represent victims of the 1984 anti-Sikh riots in courts.
Sources claimed, Phoolka may join another political party but there was no immediate confirmation from him.
Meanwhile, a section of AAP leaders and workers from Punjab raised concern over the possibility of an alliance with the Congress at a meeting with Kejriwal on Thursday.
In the four-hour meeting of the Political Affairs Committee (PAC) of the AAP held at Kejriwal's residence in New Delhi, the party's Punjab unit expressed reservations about joining hands with the Rahul Gandhi-led party.
The AAP is the main opposition in Punjab where the government is headed by the Congress.
Senior AAP leader Gopal Rai told reporters that the PAC will consider the opinion of party leaders and workers from Punjab, Haryana and Delhi in a meeting after January 15, and take a decision on alliances as per the existing situation.
AAP leader and Rajya Sabha MP Sanjay Singh said, "As of now, we have no alliance with any party. We are not saying anything on the future plans of the party".
The National Council of AAP had in its meeting last week decided to contest all 33 Lok Sabha seats in Punjab, Delhi, Haryana, Goa and Chandigarh.
The party, however, is still undecided over any pre-poll alliance with the Congress or the 'Mahagathbandhan' of various non-Bharatiya Janata Party parties.
"In the meeting with Kejriwal, some persons pointed out AAP was the main opposition in Punjab where Congress is the ruling party, which has failed to fulfil its promises, so it will be difficult to contest the elections (with Congress)," Rai said.
The meeting was attended by around 800 AAP office-bearers, party MLAs and MPs from Punjab.
The Haryana party unit will meet Kejriwal on Friday followed by the party's Delhi representatives. Such meetings will continue till January 15.
Rai said Punjab AAP unit's core committee has been asked to shortlist the names of candidates on all the seats and send the same to the PAC for a final decision. The party has already announced its candidates on five seats in the state.
The booth-level organisation in Punjab will be strengthened under the stewardship of block in-charges till January 30. Afterwards, a door-to-door campaign will be launched to reach out to the voters, the AAP leader said.
An agitation against high power tariff in the northern state has also been planned by the AAP, Rai added.
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