Angela Rayner this morning revealed she has paid £40,000 to HMRC to settle a dispute over underpaying stamp duty and potentially launch her Labour leadership campaign.
The former Deputy Prime Minister insisted she has not been 'tax dodging' - paving the way for a bid to enter No10.
With her party plunged into civil war, Ms Rayner also insisted that she will not run with her friend Andy Burnham, declaring: 'I am not doing deals'.
It comes as Health Secretary Wes Streeting prepares to resign from Government and launch his own bid for leadership today with Ed Miliband also rumoured to be a potential candidate.
Ms Rayner today admitted she has settled the £40,000 she owed in unpaid stamp duty on her seaside home in East Sussex.
But she insists that HMRC cleared her of 'deliberate wrongdoing or carelessness over her tax affairs'.
06:24
Wes Streeting looks set to plunge Labour into civil war today by quitting the Cabinet to mount a leadership challenge against Keir Starmer
The Health Secretary is ready to fire the starting gun this morning following yesterday's face-to-face showdown with the beleaguered Prime Minister which lasted just 16 minutes.
His plans triggered panic in Downing Street and fury on the Labour Left, where MPs are even considering Ed Miliband as they scramble to unite behind a candidate of their own.
Sir Keir was reduced to pleading with his MPs to step back from the brink of a leadership contest, which he warned would cause 'chaos' and 'paralyse' the Government for months.
During a series of private meetings in the Commons, he told them: 'We can't let a leadership contest plunge us into chaos and a challenge would 100 per cent do that.'
06:19
Rayner launches bid for Number 10
Angela Rayner today revealed she has handed £40,000 to HMRC for underpaying stamp duty - but insisted she has not been 'tax dodging' - paving the way for a potential Labour leadership bid.
With her party plunged into civil war, Ms Rayner has also insisted that she will not run with her friend Andy Burnham, declaring: 'I am not doing deals'.
She was forced to resign as Deputy Prime Minister and Housing Secretary last September after a sleaze watchdog found she broke the Ministerial Code when she underpaid about £40,000 of stamp duty on an £800,000 seaside apartment in Hove, East Sussex.
In an interview with ITV the former deputy Labour leader said 'people felt that I was tax dodging' but 'HMRC have concluded that there wasn't any wrongdoing on my behalf'.
It comes as Health Secretary Wes Streeting prepares to resign from Government and launch his own bid for leadership today with Ed Miliband also rumoured to be a potential candidate.
06:17
Good Morning and welcome to the Daily Mail's live blog
Angela Rayner paved the way for a potential Labour leadership challenge on Thursday morning as Wes Streeting looks set to resign and Keir Starmer clings on to power.
Stick with us today for the latest on the Labour leadership battle.