Labour Party MP Chris Carter has been removed from Labour's caucus after admitting he was behind an anonymous letter aimed at destabilising Phil Goff's leadership.
The letter, which was distributed to media outlets at Parliament on Thursday, claimed that growing discontent with Mr Goff's leadership style and poor polling would soon come to a head.
But Mr Goff said he recognised the hand-writing on the envelopes and confronted Mr Carter over the letter.
The Labour caucus unanimously suspended him on Thursday afternoon.
Mr Goff said Mr Carter's letter was stupid and disloyal, and its contents were untrue. Mr Carter had no future with the party.
He said Labour was ready to fight a by-election if Mr Carter resigned, and would expect to win.
Party president Andrew Little said the matter would be referred to a meeting of the party's national council in a week's time.
Former party president Mike Williams said Mr Carter was unlikely to survive in the party.
Mr Carter said he wrote the letter because he believed Mr Goff could no longer win the election.
Mr Carter, who arrived at Auckland Airport from Wellington on Thursday evening, told waiting journalists he owed it to the people he represented, and the people who voted for Labour, to have a leader who could win.
Mr Carter said Mr Goff was a nice man but one who could not win.
He said the Labour leader had flip-flopped over the tradable fourth week of annual holiday which was, in his eyes, the last straw.
Mr Carter said he hoped his actions would cause some of his colleagues to reflect on what had happened and come to the same conclusion that a new leader was needed.
Mr Carter admitted his actions might cost him his political career.
King also in sights
Earlier, deputy leader Annette King said the anonymous letter suggested a move would be made against her as well as Mr Goff.
Ms King called the letter a malicious fabrication.
The letter said MPs with union backgrounds would next week challenge Mr Goff's position on whether the fourth week of annual leave entitlements could be traded in for money.
Mr Goff has said he does not have huge objections to that idea.
The letter said a move against Mr Goff and Ms King was expected before the next election.
It also said Manurewa MP George Hawkins was being challenged by a union member for nomination, and was threatening a by-election.