"I feel betrayed," Tan was quoted by Today newspaper as saying on Thursday evening in reaction to the decision of WP's central executive committee (CEC).
The CEC decided that night to give the two NCMP seats allotted to the party in this General Election to rookie Gerald Giam, 34, who was part of the East Coast GRC team, and Yee Jenn Jong, who lost by just 388 votes in Joo Chiat single seat ward.
Tan, 55, was a long-time CEC member and he had led the East Coast GRC team to garner 45.2 percent of the votes against the People's Action Party chief led by labour chief Lim Swee Say.
"I am disappointed that Low (Thia Khiang) and part of the CEC have decided to go against the people's wishes, citing party renewal as their reason. I too also believe in the renewal of the party but in an orderly manner with succession plans," he said.
"Not like this, dropped like a bomb on my lap," he continued. "As a matter of principle, I have no choice by to resign."
Tan pointed out that he helped build the East Coast team since 2005 and was the only remaining one after the 2006 GE.
"I wanted the NCMP post so that I would be able to be the voice of the people," he told the same paper.
He is said to have helped convince corporate lawyer Chen Show Mao and Yee to join the party.
In a statement from WP chairman Sylvia Lim on Friday, the party confirmed its nomination of Yee and Giam for the two NCMP seats.
After deliberation, the party's executive council has decided to accept the two NCMP seats available to the WP, said the statement.
Giam told Yahoo! Singapore, he is "very sad" that Tan has decided to leave the party under these circumstances.
"I had the privilege of serving with Eric Tan for the past two years as a member of the WP's Eastern Area Committee, of which he was the chairman," said Giam.
"He is a caring and capable leader, and possesses a wealth of knowledge, particularly in the are of economics and finance. He is also a friend and mentor to me," he said, adding that Tan was one of the WP leaders who helped bring him into the party.
As an NCMP, Giam wants to raise issues that affect the ordinary Singaporean, he said. The many areas he has a keen interest in include housing, transport and economic and labour policy.
But he will want to listen to residents and better understand their needs and concerns before speaking, he added. The party's Eastern Area Committee plans to continue reaching out to residents in East Coast GRC.
Said Giam, "I also look forward to assisting my colleagues in the WP's Aljunied Team in their constituency work."
Yee said, he is "very honoured" by the party's faith in him. The residents also gave him a strong mandate, he said.
The issues that he would like to champion in Parliament include creating a more enterprising nation, improving education and helping senior citizens.