Debbie Abrahams has been sacked from Labour's frontbench amid a probe into claims of workplace bullying.
The shadow work and pensions secretary was suspended earlier this year pending the outcome of an internal inquiry.
Labour said following a "thorough investigation", Ms Abrahams had been referred to the disputes panel of the ruling National Executive Committee.
But the MP for Oldham East and Saddleworth said the probe was "neither thorough, fair, nor independent".
When the allegations surfaced in March, the 57-year old said they were "spurious" and she had not ruled out legal action against the party.
In a statement on Tuesday, she said she "strongly refutes" the bullying claims and would continue to play an active role from the backbenches.
On Tuesday, a Labour spokesman said Ms Abrahams had been "relieved of her post as shadow work and pensions secretary".
"After a thorough party investigation into allegations of workplace bullying, Debbie Abrahams has been referred to the NEC disputes committee," they added.
The BBC's political correspondent Iain Watson said he understood the announcement followed an HR investigation into allegations of bullying by an unspecified number of staff.
The BBC understands the investigation upheld complaints and found that Ms Abrahams engaged in a pattern of bullying behaviour towards her staff employed by the Labour Party.
Margaret Greenwood, who took over temporarily from Ms Abrahams in March, will continue in the role.