Shadow foreign secretary Hilary Benn has been sacked from the shadow cabinet amid reports he was encouraging ministers to resign should Jeremy Corbyn ignore a vote of no confidence.
The Labour leader is facing a vote of no confidence over claims he fought a "lacklustre" campaign in the EU vote.
A Labour spokesman said Mr Corbyn had "lost confidence" in Mr Benn.
Shadow chancellor John McDonnell said Mr Corbyn "worked himself to the ground" during the four-month campaign.
Senior Labour sources have also told the BBC that a significant number of shadow cabinet resignations were likely if Jeremy Corbyn were to ignore the result of the confidence vote.
Secret ballot
Labour MPs Dame Margaret Hodge and Ann Coffey submitted a motion of no confidence against Mr Corbyn - who campaigned on the losing Remain side - in a letter to the Parliamentary Labour Party chairman John Cryer on Friday.
The motion has no formal constitutional force but calls for a discussion at their next PLP meeting on Monday.
The chairman will decide whether it is debated. If accepted, a secret ballot of Labour MPs could be held on Tuesday.
BBC political correspondent Iain Watson said Mr Benn had been publicly pretty loyal to Mr Corbyn, although the pair had disagreed over issues such as whether to extend the bombing campaign from Iraq to Syria against so-called Islamic State.
But he added that losing the EU vote "tipped the balance" and Mr Corbyn had received "huge criticism" from colleagues, and that criticism was seemingly "moving up a gear" with discussions of resignations.