Sir Keir Starmer has sacked Angela Rayner as Labour Party chair, Sky News understands.
Ms Rayner remains the party’s deputy leader as that is an elected position.
“Keir said he was taking full responsibility for the result of the elections – and he said we need to change,” a Labour source said about the decision.
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“That means changing how we run our campaigns in the future.
“Angela will continue to play a senior role in Keir’s team.”
The shock move comes after a mixed night for Labour in elections across the UK, in what was the first electoral test of Sir Keir’s stewardship of the party.
Labour lost Hartlepool to the Conservatives for the first time since the seat was formed in 1974, while the party has so far posted a net loss of six councils and more than 200 councillors in England.
And Labour also failed to win mayoral contests in the West Midlands and Tees Valley.
However, the party exceeded expectations in Wales, with Mark Drakeford winning a working Senedd majority.
Meanwhile, the party gained the West of England mayoralty from the Conservatives and won the Greater Manchester and Liverpool City Region contests.
Speaking on Friday, Sir Keir said he took “full responsibility” for Labour’s performance and was “bitterly disappointed”.
The party’s performance has sparked recriminations about the direction of the party under Sir Keir’s leadership, with some Labour figures demanding a change in strategy.
John McDonnell, shadow chancellor under Sir Keir’s predecessor Jeremy Corbyn, said Sir Keir was “scapegoating everyone apart from himself”.
He added: “This isn’t leadership, it’s a cowardly avoidance of responsibility.”
Analysis: A major row seems to be brewing at the top of the Labour Party
By Sam Coates, deputy political editor
The blame game inside Labour is escalating tonight.
There’s a fight over whether Labour deputy leader Angela Rayner should take responsibility for the elections as formal campaign head – or whether it should be Sir Keir Starmer.
Whilst it’s not completely clear what is happening it does seem that moves are afoot to remove her from her post.
Critics are suggesting Ms Rayner should carry the can for Labour losses, but other Labour sources defend her: “Trying to blame Angela for the failures of this campaign which were entirely run by Keir’s office, and that Keir has himself said he will take responsibility for, is as absurd as it is ridiculous.”
“[Sacking her] would mean sacrificing a working class female care worker because some North Londoner focus groupers can’t connect with the North. Everybody knows his office ran the campaign.”
Some Labour sources suggest Sir Keir wants to change her role, but his office are not commenting on reshuffle rumours.