Sir Keir Starmer is expected to announce his resignation as early as Monday, according to reports, following Andy Burnham’s victory in Makerfield.
The Prime Minister will set out timings for his exit from Downing Street in a speech on Monday, The Observer reported, after a turbulent period in office.
Starmer’s grip on power has slipped following several policy U-turns, the Mandelson scandal, and a recent string of high-profile resignations from government.
Cabinet ministers, Number 10 advisers, and senior party figures told the Prime Minister directly that his position had become untenable.
Business Secretary Peter Kyle, a long-standing Starmer ally, declined to dismiss questions about the expected resignation during media interviews on Sunday.
Kyle said: “I don’t know what’s going to unfold in the days that lie ahead. I don’t know the decisions that he will make on behalf of our country as he considers these issues, and then makes decisions.”
He added: “We will find a way for this to be whatever unfolds, a functional process, one where the Labour Party is seen to put the interests of the country first and foremost.”
Kyle confirmed he had held a “frank conversation” with Starmer on Friday, and that the Prime Minister was “making time to reflect on the political realities.”
Starmer is the sixth Prime Minister in 16 years and, should he resign, would be the shortest-serving Labour Prime Minister in history.
His premiership was destabilised early by a vocal parliamentary Labour Party, with a U-turn on winter fuel payments and a failure to implement welfare cuts among the first signs of trouble.
Dire local election results in May, MPs backing Burnham’s return to parliament, and a row with former Cabinet minister John Healey over defence funding further damaged his authority.
A resignation would trigger a Labour leadership contest, though broad support for Burnham among party members could mean the former Manchester mayor moves swiftly into Downing Street.
Former Health Secretary Wes Streeting has confirmed he would enter a leadership race, with other rumoured candidates including former armed forces minister Al Carns and Foreign Secretary Yvette Cooper.
Reports also emerged Sunday that Chancellor Rachel Reeves would lose her position if Starmer resigned and Burnham became Prime Minister.
The Sunday Times reported that Ed Miliband has been suggested as a possible Chancellor, though Unite general secretary Sharon Graham urged Burnham to avoid appointing him due to his commitment to net zero.
Other potential Chancellor candidates mentioned include Pat McFadden, John Healey, and Streeting, who recently delivered a speech in favour of “progressive capitalism.”
Burnham adviser and former Treasury minister Jim O’Neill suggested on Saturday that fiscal rules could be adjusted to allow greater government borrowing for infrastructure investment.
“I don’t think you’d necessarily have to rip up the fiscal rules. I think you just need to be bolder about borrowing to invest,” O’Neill said.
O’Neill also urged Burnham to scrap the triple lock pension in exchange for a “significantly lower bond market premium and a big boost to financial conditions that would boost consumer and corporate confidence.”