A majority of party members backed a motion of no confidence in UKIP Leader Henry Bolton, who had faced growing pressure to resign since a newspaper in mid-January published the messages Jo Marney wrote about Meghan Markle, Prince Harry's fiancee.
Shortly after 4.30pm it was announced party members at the extraordinary general meeting (EGM) had voted to back a no confidence motion in him.
Outgoing party chairman Paul Oakden said a new leadership election would happen within 90 days.
Neil Hamilton, UKIP's leader in Wales, told Sky that Farage had been "shackling himself to a corpse" in supporting Bolton.
"After more than 20 years of touring the country, addressing 1,500 public meetings at which I pushed the Ukip message and built up the party, I look on the latest twist in its 25-year history with a mixture of dismay and disbelief".
Mr Bolton, a former army officer who became leader last September, said he would stay in his role until party members vote on his future.
UKIP's general secretary has said Mr Bolton's days as leader "are numbered" even if he survives the vote.
The pro-Brexit party has lurched from crisis to crisis since Mr Farage relinquished power following the 2016 referendum, with a succession of leading party figures failing to keep a grip on the leadership.
He also said he thought it was going to be very hard for the party to survive another leadership change.
The cash-strapped party faces a series of challenges, including the prospect of a hefty legal bill over a defamation action brought by Rotherham's three Labour MPs against MEP Jane Collins. My love for Henry is unconditional of political leaderships. This is a decision for the members, and I am not a member. He also advised Mr Bolton to "get on with the rest of your life" - but Mr Bolton raised the possibility that he might stand again for the leadership, or even sue the party, saying: 'You can not keep a good man down - I am not finished with politics'.
Senior Ukip figure Suzanne Evans told the Press Association ahead of the vote that it was "crunch time" for the party and Mr Farage should again take the helm.
"The people who started complaining about this were people on the NEC, none of whom voted for me in the leadership election", he said.
Mr Bolton had received the backing of Nigel Farage in an intervention that could have proved influential, he said the party was close to collapse but that Mr Bolton was the right person to lead the party out of his difficulties.