The defection of party chairman Colm Keaveney has sparked fears that others could vote against social welfare cuts next week.
Tanaiste Eamon Gilmore was struggling to keep the peace as Labour was plunged into crisis.
Today Communications Minister Pat Rabbitte said: "Some of the interventions I have seen over the last number of weeks, I haven't seen that type of calculated venom before."
He was referring to people now outside the Labour party.
Reacting to Mr Keaveney's decision, Mr Rabbitte said there had always been a small section of the Labour party which was more suited to the Opposition.
"We can't afford self-indulgence at this time. Any single member of the Labour parliamentary party could have gone pirouetting on the plinth parading their struggle with their conscience saying 'watch me' as I agonise about this decision.
"Instead they took the hard decision to bring in a Budget that offers us the prospect of protecting the poor."
Galway TD Keaveney shocked his colleagues by voting with the Opposition against cuts to the likes of child benefit and the respite care grant.
The move sparked an emergency meeting in a bid to persuade other disgruntled TDs and senators to hold the line.
Mr Keaveney said the decision to defy the Government was taken with a "heavy heart" but that he had "serious misgivings" about the measures. Mr Keaveney received a letter from Labour HQ telling him to vacate his office immediately.
However, the outspoken TD has vowed to remain on as party chairman-- a scenario that would humiliate Mr Gilmore.
The Tanaiste was today consulting the party's legal team in a bid to oust Mr Keaveney. He said: "I don't think it's tenable for somebody who's out of the parliamentary Labour party to hold a senior office in the party."
However, Mr Keaveney has claimed he can only be removed by the party membership -- a vote which would not take place until the annual conference in April. He added: "I'm chairperson of the Labour Party until the membership decide whether or not I should be chairperson."
Mr Keaveney has been a thorn in the side of the leadership, with a senior source saying he was the "most divisive member of the Labour Party".
Although the social welfare bill has passed all Dail stages, a group of disgruntled Labour TDs are understood to be discussing whether to oppose it.
Senators James Heffernan, Denis Landy and John Whelan could create another headache for Mr Gilmore as they may vote against the measures.
The Government has a thin majority in the Seanad, meaning measures may be rejected if Labour and a number of independents vote against them.
Any scenario where more deputies jump ship is sure to heighten speculation of a leadership challenge in the future.