A Labor MP has quit the party over the freebies scandal, accusing Sir Keir Starmer of presiding over "sleaze, nepotism and apparent greed" that is "outrageous".
Rosie Duffield, the MP for Canterbury, resigned from her post, telling Sir Keir she was "ashamed" of what he and his "inner circle" had done to "tarnish and humiliate our once proud party".
She declared him unfit for office after he "inexplicably" chose to accept designer suits while pursuing "cruel and unnecessary" policies.
The dramatic resignation roiled Downing Street on Saturday evening and came as Sir Keir faces mounting pressure from his own party to get to grips with the donations crisis.
In her resignation letter to the Prime Minister, Ms Duffield said: "Someone of well-above-average wealth who chooses to maintain the Conservatives' two-child limit to receive benefits that entrench children in poverty, while inexplicably accepting expensive personal gifts , such as designer suits and glasses. This costs more than most of these people can comprehend - this absolutely does not deserve to carry the title of Labor Prime Minister.
"Forcing a vote [on the winter fuel payment] to make many older people sicker and colder, while you and your favorite colleagues enjoy free family trips to events that most people would have to save hard for - why don't you show even the slightest bit of shame?"
Ms Duffield, 53, has been a consistent critic of the party over its handling of transgender issues and has not attended previous party conferences on the issue.
She is the fastest MP to resign after a general election in modern political history.
It came after Sir Keir admitted on Friday that Lord Alli had given him £32,000 to pay for clothes, double what he had previously declared.
Sir Keir also received £2,400 from Lord Alli for glasses and the use of an £18 million penthouse during the election campaign and on other occasions. Members of his frontbench team have also made large donations from his colleague.
On Saturday evening, a frontbench source warned that Downing Street had to change course, saying "it is getting to the point where it could be final".
"If you keep explaining, you lose. It looks like you are doing something dodgy," they told The Telegraph. "Keir must be absolutely straight and draw a line under it."
A growing number of Labor MPs and members of Sir Keir's own cabinet are believed to be frustrated by the row, with one complaining that ministers need to be more 'political'.
Ministers who have not yet been drawn into the ongoing freebie saga are trying to distance themselves from it by privately emphasizing how modestly they dress and how little they care about designer clothes.
Some members of the Rose Network, Labour's club for donors, are said to be concerned about the direction No 10 is taking, with one long-standing donor calling Sir Keir's decision to accept so many designer clothes as donations "utterly obscene". .
Members of Labour's powerful governing body, the National Executive Committee (NEC), are also angry at the party's handling of the row.
Mish Rahman, a member of the NEC, said Labour's first conference since winning the election "should have been jubilation and celebration but instead became mired in talk of cuts and questionable donations". He added: "The honeymoon is over in record time and the discomfort is spreading."
A second NEC member told The Telegraph that the apparent "battle for freebies" was "quite embarrassing".
"We have been waiting for so long to come to power, but it feels like the moment we do, there will be a battle for freebies," they said. "The strategy around it was so bad - they couldn't get a handle on it."
Other ministers are concerned about negative rhetoric from Downing Street and the Treasury, especially in the run-up to the budget on October 30. "The budget will be painful," said one minister. "But we can't stay in this doom and gloom forever."
Meanwhile, tensions with Sue Gray, Sir Keir's chief of staff, continue and government staff are locked in negotiations with Downing Street over their salaries, with many offered a pay cut compared to what they earned in opposition.
Several special advisers are now threatening to quit, with one source pointing out that the job of a government leader is much harder than they thought, and saying they can make a lot more money in the private sector.
Another confirmed that some senior aides had raised the prospect of walking away, but said this was more of a negotiating tactic to try to command a higher salary.
Sir Keir said last week that he would no longer accept money for clothes while in office, as did Rachel Reeves, the Chancellor, and Angela Rayner, the Deputy Prime Minister.
Labor has claimed that all opposition parties are investing in candidate presentation, including speech and media training, as well as photography and clothing.
But on Saturday, John Glen, the shadow paymaster-general, reported Sir Keir to the parliamentary commissioner for standards and the registrar of members' financial interests, demanding a new investigation.
In a letter to the standards watchdog, Mr Glen claimed that Sir Keir had failed to explain who was behind the salaries of 14 of his aides in the run-up to the election. He also raised questions about the possible failure to declare hospitality and gifts from lobbyists.
Under Commons rules, all MPs must ensure that anyone who holds a parliamentary pass as part of their office declares who pays their salary and any other income they receive above £450 from the same source.
But Mr Glen points out that Sir Keir's register of interests, published on May 30, does not list any source of income for 14 of his aides.
In his letter to the Commissioner, Mr Glen said: "There is a clear public interest in ensuring that the most senior parliamentarians comply with the rules, and for proper transparency about the corporate funding of Keir Starmer's parliamentary office, and in relation to any associated gifts or hospitality. . This is also not his first violation of the rules."
'Lack of basic politics and political instincts'
In her resignation letter, first reported by The Sunday Times, Ms Duffield slammed the Prime Minister's "management style and technocratic approach", saying his "lack of basic politics and political instincts have fallen on us as a party".
She said the revelations of "hypocrisy" were "stunning and increasingly outrageous", adding: "I cannot express how angry I and my colleagues are at your complete lack of understanding of how you have made us all appear .'
A Labor Party source said: "This changed Labor Party will no longer follow any lecture from a Conservative Party that has specialized - year after year - in scandal, sleaze and corruption.
"With Keir Starmer's leadership, this government is more transparent than ever and continues to deliver on the change the country voted for on July 4."