Shadow Energy and Climate Change Secretary Lisa Nandy has resigned from her post.
The news comes as Labour Leader Jeremy Corbyn is facing a vote of no confidence from his party MPs.
Many have been critical of his leadership since his election in September.
Ms Nandy, along with a few other Labour MPs, met with Mr Corbyn this morning to discuss the future of the party.
In a joint statement with Shadow Work and Pensions Secretary Owen Smith, she said: “We had hoped to leave that meeting with the confidence to continue to support the leadership in bringing the Labour Party together from within the Shadow Cabinet. During the course of the meeting it became clear that this would not be possible.
“It is therefore with huge sadness that we have resigned from the Shadow Cabinet.”
They believe Deputy Labour Leader Tom Watson should take over the post as interim leader.
The statement adds: “The lack of confidence in the leadership goes beyond the small group of MPs who have consistently opposed Jeremy since his election. It has become clear that he is unable to form a broad, inclusive Shadow Cabinet that draws on the best of our movement’s left and right traditions.”
The news comes amid speculation Ms Nandy is planning to stand against Mr Corbyn in a leadership election.