Labour's caucus has given party leader David Shearer a unanimous vote of confidence and his rival, David Cunliffe, has been stripped of his portfolios and banished to the back bench.
Mr Cunliffe, the party's fifth-ranked MP who was the spokesman for economic development, avoided media when he left Tuesday's caucus meeting.
Mr Shearer called his MPs together because Mr Cunliffe refused to endorse his leadership at Labour's weekend annual conference and persisted with his campaign to undermine his position.
"I no longer have confidence in him, he has lost my trust," Mr Shearer told a press conference after the caucus vote.
"I have demoted David Cunliffe from the front bench to the unranked section of the caucus."
Mr Shearer hasn't taken action against any of Mr Cunliffe's supporters, thought to number fewer than 10 in the 34-member caucus.
They weren't prepared to show their hand on Tuesday but Mr Cunliffe will be able to use the summer recess to muster support for a challenge at the leadership review in February - if he wants and if he can gather enough backers.
To trigger a leadership vote in February he will need 40 per cent of caucus to back him - 14 votes - and after Tuesday's vote that seems unlikely.
Mr Cunliffe had previously said he would support Mr Shearer in the caucus vote, but wouldn't give an assurance that his loyalty would last through to the February review.
Mr Shearer says he is demanding a united caucus and expects to win in February if Mr Cunliffe mounts a challenge.
"I will win, I can count," he said.
"I have the confidence of my caucus, I've spoken to many of them and February isn't an issue."Mr Shearer will announce a new economic development spokesman in the next few days.