Jeremy Corbyn is likely to face a leadership challenge within days, shadow chancellor John McDonnell has said.
McDonnell said that Corbyn will take part in any future leadership contest, but added he is confident the party could unite after the vote.
"The internal difficulties within both parties will be resolved, hopefully, by democratic means, and on that basis, amicably, the Labour party will back come together," he said.
"If there is to be a leadership challenge to Jeremy Corbyn, bring that forward, we will use the democratic process and our party members will decide who is the leader and the future direction of our party."
The shadow chancellor said he will chair a Corbyn leadership campaign and says he hopes it will bring in new members.
Laying out Labour's economic response to a Brexit vote, he said the party's red lines are free trade in the Single Market, while EU nationals in the UK now will have their rights impacted on in the future.
He added that Labour won't contest the result of the referendum and once the UK leaves free movement of people will come to an end.
Labour leader Jeremy Corbyn has come under increasing pressure to stand down from within his own party over fears he can not provide the leadership to win a general election and dragged his feat in the EU referendum campaign.
However, McDonnell today said that Corbyn has "excellent relationships" with socialist parties in Europe and will work with them to get a deal for UK.
This week saw 172 of Labour's MPs declare no confidence in Corbyn, with 40 lending the leader their support, putting the rebels at just over 80 per cent of those voting.
Former shadow business secretary Angela Eagle is expected to launch her bid next week, hoping for Corbyn to stand down.
If Corbyn does not stand down and is instead challenged, Eagle - or any other contender - would have to face him in a leadership election.
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Some 60,000 people have reportedly joined the Labour party this week, though it is not known whether they joined to support Corbyn or not.
This week a YouGov poll of 1,203 Labour members found 50 per cent would vote for Corbyn but 47 per cent would not.
That's compared to a lead of 64 per cent to 33 per cent in May.
But, the same poll also found that the incumbent Corbyn would beat challenger Eagle in a head-to-head by 50 per cent to 40 per cent.