Ken Livingstone could be awarded a peerage in a reported attempt by Jeremy Corbyn to get his ally into the shadow cabinet.
The Labour leader is said to be "desperate" to get the former London mayor into his cabinet to help him deal with a mounting rebellion from moderates on the front benches.
But MPs have told the Sun on Sunday that such a move would be considered a "declaration of war" on the parliamentary party.
They have called for Mr Livingstone to be sacked as co-chairman of Labour's defence policy review after he told shadow minister Kevan Jones - who has had a well-documented battle with depression - to seek "psychiatric help".
One senior party figure told the newspaper: "This will simply pour petrol on the flames of rage consuming the Parliamentary Labour Party."
Mr Livingstone - dubbed "Red Ken" by the media for his left wing policies while running London - has few friends on the Labour front benches and moderates fear his appointment could be a plot by the hard-left circle around Mr Corbyn to quash rebellion.
One shadow minister said: "There’d be a huge rumpus for a couple of days and once it blows over he’s in the shadow cabinet. It would give Ken free reign to be Jeremy’s attack dog."
It comes as Shadow Chancellor John McDonald hinted last week there could be a New Year "purge" of the 66 MPs who defied Mr Corbyn to vote in favour of air strikes against Isis targets in Syria.
Writing in the Observer he said: "Now Jeremy Corbyn's leadership has been strengthened.
"The message is clear: unite around the principles of the new politics and we can be the most powerful force for progressive political change in generations."
A source told the Independent the peerage claims are "complete nonsense".
A spokesman for Mr Corbyn said: "There has been no discussion of peerages or names."
