Angela Rayner is said to be preparing a bid to oust Sir Keir Starmer as Labour leader.
On Thursday, Labour MPs came out of the woodwork to push both Ms Rayner and Wes Streeting to launch a leadership challenge against Sir Keir over the Peter Mandelson scandal.
The ex-Deputy PM is now said to have put together a £1million-valued war chest to back her bid - just days after leading a Labour revolt against attempts to "cover up" files around Mandelson's chaos-ridden appointment as US ambassador.
She has also told friends she is "ready" to launch a leadership campaign, according to the Mail.
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But Ms Rayner's rumoured ambitions could be derailed over an unresolved investigation into her tax affairs - for which she resigned last year.
Labour MPs, including her own allies, have warned they may not back her while an HMRC probe runs on.
"I worry about the outstanding tax she apparently owes," one of the party's left told The Telegraph.
Another MP said: "She could win the members. However, I don't see how she can be a candidate until she's paid. A lot of the wider party would love her to stand."
Angela Rayner is said to be preparing a bid to oust Sir Keir Starmer as Labour leader
| PAAdditionally, a spokesman for Ms Rayner told the Daily Mail they "do not recognise" the claims she had told MPs she was "ready" to challenge Sir Keir.
Mr Streeting may pose a leadership challenge, though his close friendship with Mandelson could come into question. The Health Secretary is said to have deleted old photos with the former Labour peer.
Home Secretary Shabana Mahmood has also been touted to challenge the Prime Minister. However, she may be unpopular with many Labour MPs for being seen as too right-wing.
Last night, the Prime Minister hosted Labour MPs at Chequers in a bid to win them over after a week of party turmoil.
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The Prime Minister admitted in the Commons in Wednesday that he had been made aware of a relationship between Peter Mandelson and Jeffrey Epstein before he was appointed US ambassador
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But his party's heavyweights have publicly laid into him with ex-frontbencher Andy McDonald saying his job was "hanging by a thread".
Labour's former deputy leader Baroness Harman said Sir Keir looked weak and gullible, warning on Sky News's Electoral Dysfunction podcast that the scandal would "finish" him.
The fallout came after the PM admitted he had been made aware of Mandelson's relationship with convicted paedophile Jeffrey Epstein when Kemi Badenoch put it to him at Prime Minister's Questions on Wednesday.
The Tory Leader said: "Can the Prime Minister tell us did the official security vetting he received mention Mandelson’s ongoing relationship with the paedophile Jeffrey Epstein?"
Sir Keir confessed: "Yes, it did. As a result, various questions were put to him."
But despite his honesty and apology, the Prime Minister's position is looking even more precarious than ever, with Labour MPs publicly criticising the decision.
Ian Byrne, Labour MP for Liverpool West Derby, said on Friday he "needs a miracle", while Simon Opher MP called for a "clearout" at No10, including Chief of Staff, Morgan McSweeney.
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