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Rupert Lowe, leader of Restore Britain, called the move a "Reform-sponsored media circus" designed to deflect from questions about concealed financial donations.
Labour Party officials urged Farage to face the probe rather than staging an electoral distraction.
"Nigel Farage is engulfed in a sleaze scandal and he's desperately trying to change the subject," a Labour spokesman said.
Liberal Democrat leader Sir Ed Davey and Green Party leader Zack Polanski also urged a total boycott.
Foreign Secretary Yvette Cooper stated that the by-election disrespects Clacton residents to serve a personal political tantrum.
"This is a stunt that is all about his own interest. It's not about the people of Clacton," she said.
Defense Secretary Dan Jarvis added that the resignation was a direct effort to outrun financial scrutiny.
"I think he senses that he is in real trouble and has taken action to try and get in front of that," he said.
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Count Binface, a serial election candidate, welcomed the contest with a simple message: "Game on, Nige."
