Suffolk County Executive Steve Levy should consider resigning following an investigation of his campaign fund-raising operation, at least one official suggested yesterday.

Levy, who lost a bid for the GOP gubernatorial nod last year but was still considered a leading contender to challenge Gov. Cuomo in three years, reached a settlement Thursday with prosecutors.

The Democrat-turned-Republican agreed not to run for a third term in November and to surrender his $4 million campaign treasury to Suffolk DA Thomas Spota, who would return the money to donors.