David Shearer maintains his leadership has not been damaged after backtracking on a controversial women-only electorate selection plan.
Mr Shearer yesterday requested that the party's proposal to prohibit men from standing as candidates in some electorates be withdrawn.
Mr Shearer denied that his request to withdraw the proposal - which was to be voted on at its conference in November - was in any way anti-democratic and said his handling of the matter had not been damaging for his leadership.
However, the u-turn was followed by speculation that a no confidence letter was apparently being circulated by Labour MPs Andrew Little, Clayton Cosgrove and Shane Jones, to get rid of the Labour leader.
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Radio Live's Duncan Garner tweeted yesterday: "Good source. Coup on in Labour. Letter of no confidence being circulated. It's over for Shearer. Watch for his resignation."
The trio denied the claims, and several other Labour MPs lashed out at Mr Garner on Twitter.
Grant Robertson tweeted to Mr Garner: "I have now confirmed with the whole caucus. There is no letter. This is just made up. Apology?"
Labour MP Chris Hipkins also hit back at Mr Garner, tweeting: "Your source is full of crap. No letter. No leadership challenge. Stop making things up."
Rongotai MP Annette King joined in the fight-back saying the story was "pure bullshit".
She last night called on Patrick Gower to front up with the so-called letter on Nightline. And when he didn't she demanded Mr Garner apologise.
She accused the reporters of feeding into political spin from right wing commentators.
Mr Hipkins also slammed the lack of a letter on Nightline, tweeting: "@Garner_Live No letter, no Nightline story, no substance. Manufacturing news plain and simple."
To which David Cunliffe responded: "@chrishipkins @Garner_Live well said Chris. Coup rumours ridiculous."
Trevor Mallard also posted: "So @Garner_Live did @patrickgowernz lie to you ? Or did you just make it up. Whichever you look like a prize dick."
The rumours came after the Labour leader yesterday found himself at odds with many in his party after he abandoned the policy aimed at increasing the number of women MPs.
Several MPs expressed disappointment at the drama the proposal has caused.
"Of course I'm not happy with it," said Dunedin South MP Clare Curran.
"It's been very damaging to the cause of getting more women into Parliament."
Hauraki-Waikato MP Nanaia Mahuta was also unimpressed.
"I certainly am disappointed, because I think the main issue is women's representation.
"Having a 45% target for the next election and then moving towards 50% I think is a good target," she said.
MP for Rimutaka Chris Hipkins agreed, saying "it hasn't been great".
However, Labour Party president Moira Coatsworth backed Mr Shearer's decision to pull the plug on the women-only shortlist idea as it had "become a distraction".
"Labour is committed to increasing the representation of women to ensure that we have the best team in Parliament, for Labour and for New Zealand," she said.
She and Mr Shearer were still committed to having 45% women in Caucus after by 2014 and 50% by 2017, she said.
"We have developed a range of proposals that will help us get there," she said.
Equal Employment Opportunities Commissioner for the Human Rights Commission, Dr Jackie Blue, said in the last five elections the percentage of women MPs had not increased in any way, shape or form.
"It's not acceptable when women make up 51% of the population to be currently only about 32% of MPs in parliament," she told TV ONE's Breakfast on Friday.
"We are in a society of equality and while women are underrepresented in politics, we do not have that equality at all," she said.