Disaffected Labour MPs are to be asked to join a new group within the party in a bid to avoid further resignations.
The move, led by deputy leader Tom Watson, is intended to give more of a voice to MPs from Labour’s social democratic tradition.
Nine MPs from that wing of the party left Labour last week, criticising the party’s leadership and direction.
Mr Watson claimed on Sunday that the new internal grouping was the only way to hold the party together.
He said it would give a platform to MPs whose views were not currently represented in Jeremy Corbyn’s shadow cabinet and a chance for them to discuss and shape policy.
A source close to Mr Corbyn said more discussion about policy was a good thing and had been a hallmark of his leadership, but signalled there would be no major shift away from current policies which were popular with voters.
Nine Labour MPs quit the party last week, accusing Mr Corbyn of a “lurch to the left” and tolerating a culture of bullying and anti-Semitism in the party.
Mr Watson, whose close friend Ian Austin is among those who have left, warned there was a “crisis for the soul” of the party and urgent action was needed.
In creating the new grouping, Mr Watson insisted he was not stoking a rebellion against Mr Corbyn but standing up for pluralism within the party.
The move was welcomed by Emma Reynolds, the Labour MP for Wolverhampton North who is among those in the party calling for another referendum on Brexit.
“I think it is an exciting new development and I hope to be part of what he’s talking about,” she told BBC Radio 4’s Westminster Hour.
“His priority is to protect pluralism in our party and the broad church that the party has always been and I do think the social democratic tradition in the party has been somewhat overlooked.”
The move was also applauded by Jon Lansman, the chair of pro-Corbyn campaign group Momentum. “We are a pluralist party … I welcome that.”
While the intention is to unify, the BBC’s political correspondent Alex Forsyth said one MP warned if there was a hostile response from the party leadership, it could lead to further splits.
Mr Corbyn has called on the nine who quit Labour to stand down and seek re-election as independent MPs.
Shadow foreign secretary Emily Thornberry has said those who resigned from her party had “betrayed” their seats and would be “crushed” if by-elections were held.
Speaking on Saturday at a Labour rally in Nottinghamshire, she said she would rather die than join a new party.
In response, Mr Watson told the BBC’s Andrew Marr show that he thought “dying is a virtue that is over-rated” and said it was “incumbent on all of us to dial down the rhetoric”.