Korski, who has Jewish heritage, added: “I categorically deny the allegation against me. Nothing was ever put to me formally ten years ago. Nor seven years ago when the allegation was alluded to.
“No investigation has ever taken place. I have been clear I would welcome and constructively participate in any investigation.”
Korski continued: “However, the pressure on my family because of this false and unproven allegation and the inability to get a hearing for my message of 'The London Dream' makes it impossible for my campaign to carry on.
“I am proud of having run a positive campaign that championed new ideas, technology and talent, and the years I have campaigned for the Conservative Party and to make the lives of Londoners better.
“I believe strongly that Londoners deserve an uplifting and positive vision for their city. I tried hard to offer that.
“The news agenda is becoming a distraction from the race and the Conservative Party.
“I wish the excellent remaining contestants well and I know the Conservative Party's eventual candidate will beat Sadiq Khan and offer the kind of rejuvenation London so desperately needs.
“I will do my utmost to support the Conservative Party and the eventual Conservative candidate. Thank you to my family, friends and all my supporters."
Earlier on Wednesday, Downing Street has described the groping allegation against Korski as "very serious" and indicated Rishi Sunak would urge any further complainants to come forward.
Daniel Korski (Photo: Handout)
No. 10 declined to say whether the Prime Minister believes Korski was a suitable candidate or if he should suspend his campaign, but did say "conclusions shouldn't be drawn on until the processes are followed through".
Sunak's press secretary said: "Obviously these allegations are very serious. They are allegations that have obviously been denied by Daniel Korski himself. They should be handled in the proper way."
Goodwin, who used an article in the Times to name Korski, wrote of the incident: "When we both stood up at the end of the meeting and went to the door, the spad stepped towards me and suddenly put his hand on my breast.
“Astonished, I said loudly, 'Are you really touching my breast?' The spad sprang away from me and I left.”
Ms Goodwin later told BBC Radio 4's Today programme that since making the allegation public she has been "contacted by other women with some very interesting stories, which clearly I can't talk about for legal reasons, but I feel entirely justified in having written a piece and naming him".
Since the allegations emerged, support for Korski from fellow Conservatives has been fading away.
Education minister Claire Coutinho said she was pausing her support for Korski, after the "very serious and concerning" allegation.
Having previously praised his "clear vision for London", Ms Coutinho told Sky News: "I would say I'd be on pause at the moment because lots of things are happening.
"If there is a complaint in the system, it needs to be followed up swiftly so we can find the facts and see what's happened, but I do think it's a very serious and concerning allegation."
Korski's decision to drop out of the race leaves London Assembly member Susan Hall and barrister Moz Hussein vying to be the Tory candidate in the race for City Hall.
Hall told the JC: “Daniel fought a hard campaign with lots of fresh ideas and I appreciate his contribution to the debate.
"The allegations against him are serious and it is right that they are investigated in the proper way.
"My focus remains on making my own positive case to members and Londoners in this contest.”
