Newcastle second-rower Chris Houston is set to quit the beleaguered NRL club this week after being charged with three counts of supplying ecstasy and one count of supplying cocaine.

The Knights have refused to confirm that the 25-year-old will walk away from the club, but the Ten Network has reported a letter from the chief executive Steve Burraston to sponsors said Houston had offered his resignation and it had been accepted.

The former St George Illawarra forward was stood down indefinitely by the club on Monday following the charges, which came less than three months after Houston's former Knights teammate and flatmate Danny Wicks was charged with supply and possession of a prohibited substance.

Wicks left the club in December after he was released on bail and will appear in court again on March 31.

"As much as we would like to be able to answer the many questions people have the fact remains that this is a legal matter and it is the police and not the Newcastle Knights who are privy to the actual information that led to this development," Burraston said in a statement.

"The Knights are not aware of anything other than a strong anti-drug culture within our club and our testing regime reinforces that view.

"The decision to stand Chris down is not a reflection of our view as to guilt or innocence but recognition of the seriousness of the matter and of where his energies must now be focused.

"We will not condone any illegal activity but we will also defend the right of any individual to be judged innocent until proven otherwise."

Houston had been touted as a future NSW State of Origin player and Knights captain but his NRL career is now in tatters and his departure could free up close to $200,000 from the club's salary cap.

Newcastle coach Rick Stone refused to comment after training on Tuesday morning but two club sponsors said they are assessing the situation and whether to maintain their involvement with the club.

Bluetongue Breweries, whose deal with the Knights is worth $800,000 a season, told the Ten Network it was "extremely disappointed by the situation and is reviewing its sponsorship with the club".

Health insurance giants NIB, who are another key sponsor, have also demanded action from the club and said it is concerned by the potential damage to the company's own reputation.

Houston will appear in Newcastle Local Court on April 13.

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