Speaking at the Labour Party Conference in Liverpool, McDonnell said that while Labour would like to retain membership, it considered negotiated access to be a more likely result in the aftermath of Brexit.
"At the moment we are urging for access, because we think that's a more realistic prospect. We argued for [a] Remain [vote], so therefore membership is preferable, but access is more realistic," he said, adding that Labour would seek to lobby through the European parliament for a better result
"The advantage that we have got is a good relationship with our sister parties across Europe, so what we are trying to do is work through them to get at least a change of atmosphere in the negotiations at the moment."
Pressed by City A.M. on the terms of access that Labour would back, McDonnell said he was still hoping to see Theresa May's government secure tariff-free trade with the EU.
"How far we can get in the negotiations on that we will see, but what we want to do is tease out from government whether we can get some bipartisan approach on that," he said.
McDonnell's comments come after Streatham MP Chuka Umunna said Theresa May should: "seek to secure membership of the Single Market [alongside] a change in the agreements that we have in the war freedom of movement operates."