Angela Rayner snubbed an offer from Keir Starmer to rejoin the Cabinet, it was claimed today.
The PM is said to have sounded out his former deputy on whether she would take over as health secretary after Wes Streeting quit.
The manoeuvring followed Ms Rayner's dramatic announcement that she had settled her spat with HM Revenue & Customs over unpaid stamp duty.
However, her team made clear she was not interested in taking a role on Sir Keir's front bench, according to The Times.
James Murray was eventually shifted from the Treasury to take over the Department of Health on Thursday night.
The under-fire PM has repeatedly said he wants Ms Rayner to return to Cabinet.
A shadow Labour leadership contest is in full swing after the MP for Makerfield, Josh Simons, quit to give Andy Burnham a chance of getting back into the Commons.
The Manchester Mayor is already campaigning in the seat, although he has yet to be formally selected.
Angela Rayner snubbed an offer from Keir Starmer to rejoin the Cabinet, it was claimed today
The Labour chaos escalated today as Mr Burnham's allies accused leadership rival Wes Streeting (pictured) of sabotage after he voiced support for rejoining the EU
But Mr Burnham faces a battle against Reform, with polls having consistently shown Nigel Farage's insurgents are poised to take the constituency.
Drafting Ms Rayner into his ranks could have shored up Sir Keir's position, although Labour sources joked last week that her 'vaping and smoking' might be a problem with the health brief.
The Labour chaos escalated today as Mr Burnham's allies accused leadership rival Mr Streeting of sabotage after he voiced support for rejoining the EU.
That highlighted Mr Burnham's own strident views on reversing Brexit – seen as deeply unhelpful in the Eurosceptic seat.
The spat came amid rising anxiety in Labour ranks at the consequences if the contest – likely to be on June 18 – is lost.
Outgoing MP Josh Simons officially quit this morning, taking on the traditional post of Crown Steward and Bailiff of the Chiltern Hundreds.
Even fans of Mr Burnham say his chances of success could be worse than 50-50, with polls having consistently shown Nigel Farage's outfit on track to win.
Sir Keir visited Labour HQ this morning to thank staff for their hard work, insisting he would 'get on with the job'. He pledged to support whatever candidate is fighting Reform at the by-election.
Deputy PM David Lammy acknowledged that the 'internecine warfare' after disastrous local elections was a 'spectacular own goal'.
'Some colleagues are lighting the match and standing in the petrol,' he warned, hinting that a general election could be inevitable if the party does not pull together.
But Mr Lammy refused five times to say whether he personally wanted to rejoin the EU.
Backbencher Jonathan Hinder said the call to unwind Brexit showed a 'staggering level of out of touch'.
Sir Keir visited Labour HQ this morning to thank staff for their hard work, insisting he would 'get on with the job'
One despairing minister told the Daily Mail: 'Day one has gone well but it'll be downhill from here on in.'
Another senior Labour source said the complaint amounted to 'Wes is doing politics and I'm upset about it'. 'Welcome to Westminster, Andy. It's not all free money and buses with bees on,' they added.
A former minister said: 'Burnham has the political sense of a gnat.'
Despite the race to replace him being in full swing, Sir Keir is not expected to concede he will have to quit or set out a timetable. Instead, the premier will wait to see whether Mr Burnham can get back into the Commons.