The party's second-in-command has suggested that Andy Burnham would have won the Gorton and Denton byelection, while she urged her party to leverage the popular Greater Manchester mayor.
Overcoming a substantial 13,000-vote Labour majority from the previous general election, Hannah Spencer, a local plumber, was elected as the Green Party's fifth MP on Friday. This happened in an area that had consistently returned Labour MPs for almost one hundred years.
The Reform Party's Matt Goodwin placed second, narrowly beating the official Labour contender, Angeliki Stogia.
The surprise result has prompted fresh debate of the party's choice to block Andy Burnham from contesting the seat last month.
In an interview with the BBC, Labour's deputy leader, Lucy Powell, stated, "He probably would have held the seat. I think certainly the Greens wouldn't have gone after the seat in the same way that they did."
Powell was the only member of Labour's ruling national executive committee to support allowing Burnham to stand, with eight others, including leader Keir Starmer, voting against.
However, she told the BBC she understood "collective responsibility" for the outcome, citing concern about triggering a separate election in Greater Manchester.
Powell also stressed that her party needed to learn from the sources of Burnham's widespread popularity in the region. She said people "view him as someone who is fighting for them, someone who is delivering those core principles and party pledges."
"We have to utilise that insight, leverage Andy Burnham, but also learn from it and reflect on how we could replicate that success across the country," she continued.
Andy Burnham is understood not to have ruled out having another go at returning to parliament. One ally commented, "With all the chaos and turmoil, who knows what might happen. It would be unwise to say he would never."
To date, Burnham himself has yet to comment on the byelection result. Meanwhile, Keir Starmer has pledged to continue despite calling the poll result "disheartening."
Angela Rayner, a key figure on Labour's left, called the byelection result "a stark warning" for the party.
In contrast, the Home Secretary is expected to warn against the party shifting leftward in response to the defeat. This comes as the government proposes new laws on tougher immigration measures next week.
A source close to the Home Secretary was reported stating, "The Labour government should not learn the wrong lessons from its electoral setback. The idea that we are losing Muslim voters over immigration is simply incorrect."
Elara Vance is a seasoned business analyst with over a decade of experience covering international markets and industrial transformations.