Wes Streeting has suggested Britain should join a customs union with the EU in a move seen as a direct challenge to Sir Keir Starmer.
The Health Secretary made his intervention in an interview with The Observer, contradicting Sir Keir's position just weeks after the Prime Minister twice ruled out any shift in policy.
Senior Government sources have accused Mr Streeting of manoeuvring for a future leadership contest.
One insider told The Times: "It is not even subtle. Wes is setting out his stall for the leadership and there is nothing No10 can do about it."
Senior Government sources have accused Mr Streeting of manoeuvring for a future leadership contest
|GETTY
The remarks come amid growing tensions within the Cabinet over Britain's relationship with Europe.
A YouGov survey conducted for The Times found that eight in ten voters who backed Labour at the last election believe a new leader should abandon current policy and pursue customs union negotiations with Brussels.
The measure is also heavily backed by Liberal Democrat voters, with 76 per cent endorsing the approach and even 39 per cent of Conservative voters expressing backing.
The same research revealed even stronger appetite for deeper European integration, with 73 per cent of Labour voters from the last election favouring negotiations to rejoin the EU entirely.
The remarks come amid growing tensions within the Cabinet over Britain's relationship with Europe
|GETTY
Another senior Labour source told the newspaper any future leadership contest would never be won by a candidate defending the status quo.
Sir Keir has firmly rejected any move towards customs union membership, describing it as a "clear red line" for his government.
The Prime Minister argues that such a shift would unravel the trade agreements his administration has secured with major economies.
He told MPs: "Having now done significant trade deals with other countries, which are hugely important, it is not now sensible to unravel what is effectively the best deal with the US that any country has got."
LABOUR IN CHAOS - READ MORE:
David Lammy recently refused seven times to say whether he would support rejoining the customs union
|GETTY
The Government's position has already faced internal resistance.
Earlier this month, 13 Labour MPs rebelled by voting for a Liberal Democrat motion backing customs union membership, among them Dame Meg Hillier, who chairs the Treasury select committee.
Deputy Prime Minister David Lammy recently refused seven times to say whether he would support rejoining the customs union to boost economic growth.
Mr Streeting argued that Brexit had inflicted "a massive economic hit" on the country and that strengthening trade ties with Europe offered the clearest path to growth.
He told The Observer that he was "really uncomfortable with the level of taxation in this country".
Mr Streeting added: "We're asking a lot of individual taxpayers, we're asking a lot of businesses."
The Health Secretary acknowledged the Prime Minister's ongoing negotiations for a reset with Brussels as "a good start" but pressed for deeper engagement.
"The reason why leaving the EU hit us so hard as a country is because of the enormous economic benefits that came with being in the single market and the customs union," he said.
Our Standards: The GB News Editorial Charter