The party's second-in-command has suggested that Andy Burnham would have won the Gorton and Denton byelection, as she called for her party to make more use of the influential Greater Manchester mayor.
Overturning a sizable 13,000-vote Labour majority from the previous general election, a local Green councillor, a community tradesperson, was elected as the party's fifth MP on Friday. This occurred in an area that had elected Labour MPs for nearly a century.
The Reform Party's Matt Goodwin finished second, narrowly beating the Labour candidate, Angeliki Stogia.
The surprise result has sparked renewed questioning of the party's choice to prevent Andy Burnham from contesting the seat last month.
Speaking to the BBC, Labour's deputy leader, Lucy Powell, remarked, "Andy Burnham likely could have held the seat. I think certainly the Greens wouldn't have targeted the seat in the same way that they did."
Powell was the only member of Labour's ruling national executive committee to vote in favour of allowing Burnham to stand, with eight others, including leader Keir Starmer, opposing the move.
However, she told the BBC she understood "collective responsibility" for the ruling, citing concern about triggering a mayoral byelection in Greater Manchester.
Powell also stressed that her party must draw inspiration from the sources of Burnham's widespread popularity in the region. She said people "see in him someone who is on their side, someone who is delivering those core principles and Labour policies."
"It is essential we utilise that insight, make use of Andy Burnham, but also learn from it and consider how we could replicate that success nationally," she added.
Andy Burnham is understood not to have ruled out another attempt at becoming an MP again. One ally commented, "With all the chaos and turmoil, who knows what might happen. It would be foolish to say he would never."
To date, Burnham himself has yet to comment on the Gorton and Denton outcome. Meanwhile, Keir Starmer has vowed to fight on despite labelling the poll result "disappointing."
Angela Rayner, a prominent voice on Labour's left, called the byelection result "a stark warning" for the party.
In contrast, the Home Secretary is expected to caution about the party shifting leftward in response to the defeat. This comes as she introduces legislation for stricter border controls next week.
An insider was quoted as saying, "The party should not learn the wrong lessons from its electoral setback. The idea that we are losing Muslim voters over immigration is just plain wrong."