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Andy Burnham is facing a major backlash from the Left of his party if he picks Shabana Mahmood for his chancellor.
Rachael Maskell became the first Left-wing backbencher to publicly criticise his potential choice and back Energy Secretary Ed Miliband instead.
The York MP said Home Secretary Ms Mahmood would not be the 'right person for Chancellor' and said Mr Miliband would be a 'suitable candidate'.
It leaves PM-in-waiting Mr Burnham facing the challenge of how to keep his party happy without causing market turmoil.
On the eve of his coronation as Labour leader, little is still known about who he is likely to appoint to his cabinet when he takes control of the party.
His team insist that no final decision has been made and he will finalise appointments when he enters Number 10 on Monday as prime minister.
Ms Mahmood – who is on the Labour Right – is said to be the frontrunner for chancellor despite earlier briefings that Mr Miliband would get the job.
News of his potential appointment rattled the markets and is opposed by several of the largest unions who disagree with his stance on North Sea oil and gas.
Andy Burnham will face turmoil from the Labour Left if he appoints Shabana Mahmood as chancellor
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Should the Labour Party choose a chancellor who reassures the markets or one who pushes for bold change?
It would also unsettle the electorate to appoint the man who led Labour to a general election defeat in 2015 to the second most powerful job in Government.
But the Energy Secretary's Left-wing supporters went into battle for him in a last-ditch attempt to sway Mr Burnham, who has sought their support.
'I don't think Shabana would be the right person for Chancellor. I do think Ed Miliband would be a suitable candidate,' Ms Maskell told Times Radio.
'Not only have I seen the way that he has led his department, and if any department in government needs leadership it is the Treasury, but also I think tying in with the climate agenda is crucial when we know that the expenditure of governments into the future is going to be addressing the challenges which climate is throwing up at us.'
She added of Mr Miliband: 'I do think he has got the skills and ability, experience to be able to drive forward a different agenda from Treasury, which is absolutely crucial, but also to push that out across the country as opposed to this real centralisation which has happened in the Treasury for decades upon decades.'
MPs from the Left of the party have criticised Ms Mahmood's immigration policies and attempts to stop illegal small boat crossings, which they see as too hardline.
Zack Polanski, the leader of the Green Party, also accused Mr Burnham of being 'sub







