Ukip sources have told City A.M. that James had "cited her husband's ill health", while others said she had been reluctant to stand for leader from the beginning.
The news was first reported by the Sun newspaper.
"I have been in discussion with party officers about the role. It has become clear that I do not have sufficient authority, nor the full support of all my MEP colleagues and party officers to implement changes I believe necessary and upon which I based my campaign," James said in a statement.
"For personal and professional reasons, therefore, I will not take the election process further."
James was elected as the party’s new leader on 16 September. She has been elusive of late, turning down more than one public appearance. Last week former Ukip leadership hopeful Steven Woolfe took James’ place on the BBC debate show Question Time.
She won the leadership contest despite her refusal to attend official hustings throughout the country.
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Ukip’s sole MP, Douglas Carswell, told City A.M. he was “stunned and disappointed” by the news.
Farage resigned as Ukip leader just 11 days after the UK voted to leave the European Union saying "I want my life back".