Vaiko said the decision was taken at a high-level meeting at his residence here.
"All the members of the high-level committee participated and had detailed discussions. MDMK is leaving PWF," he said.
Vaiko, the coordinator of PWF, whose other constituents include CPI(M), CPI and VCK, said their friendship will continue.
A resolution by the committee also stated that MDMK was walking out of PWF, and that it would continue to maintain its friendship with the other three parties.
CPI(M) state secretary G Ramakrishnan said MDMK had welcomed demonestisation, "an important issue that has affected all sections of the society."
"The rest of us (CPI-M, CPI and VCK) had been carrying out struggles against demonetisation while the MDMK high command had welcomed Modi's announcement. When there is a difference of opinion in such a key issue, we think it is not possible to remain in an alliance. MDMK seemed to have decided on that basis," he told reporters in response MDMK's decision.
The CPI(M) leader, however, insisted that their friendship will continue.
PWF, coordinated by Vaiko as a movement last year, later managed to stitch an alliance with actor-politician Vijayakant's DMDK and former Union Minister GK Vasan's TMC(M) for the May 2016 polls.
However, the six-party alliance failed to create any impact, with none of the parties managing to return even a single MLA.
DMDK and TMC(M) had walked out of the alliance after the poll debacle.
"MDMK leaving PWF is along expected lines. There is nothing new in it," he said.
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