A Labour frontbencher has triggered a row by praising the Militant-dominated council which ran Liverpool in the 1980s.
As party activists gathered in the city, Dawn Butler hailed the example of left-wing former councillors who set an illegal budget in 1985 in protest at cuts to central government funding.
Her comments were criticised by senior peers and fellow MPs in a further indication of the divisions within the Parliamentary Labour Party.
Ms Butler said: “We are in Liverpool where over 30 years ago the council stood up to Thatcher and said, better to break the law than break the poor.”
Her comments at Labour’s women’s conference revived memories of the party’s battles of the 1980s, when then leader Neil Kinnock denounced “the grotesque chaos of a Labour council – a Labour council – hiring taxis to scuttle round a city handing out redundancy notices to its own workers”.
His intervention was a key moment in the drive to break the far-left Militant group’s hold over parts of the party, which ended with the expulsion of figures including Liverpool council’s deputy leader Derek Hatton.
Shadow equalities minister Ms Butler’s comments were criticised by fellow Labour frontbencher Baroness Thornton.
She said she was “surprised” Ms Butler praised a council that “issued redundancy notices to their own public sector employees, and failed to protect services too”.
Fellow Lords frontbencher Lord Kennedy retweeted Lady Thornton, adding: “Well said.”
Ms Butler’s remarks were “far from what we should be standing for as a party”, one Labour MP told the Press Association.
A Labour spokesman said: “The point Dawn was making was that like the Thatcher government of the 1980s, this Tory Government has prioritised tax cuts for the rich while cutting services like women’s refuges that save lives and keep women safe.”
Ms Butler’s comments came on the eve of Labour’s main autumn gathering where there is set to be a fresh row over Brexit policy.
Shadow chancellor John McDonnell indicated Labour would resist grassroots pressure to commit to a second referendum, warning of the risk that a re-run vote could stoke far-right populism and xenophobia.
The shadow chancellor also suggested the rail industry could be renationalised within five years under a Labour government.
He told BBC Radio 4’s Today programme it would be “possible” to bring all franchises back under public control during a single term in office, amid reports he is planning a Public Ownership Unit within the Treasury to deal with renationalisations.
But at The World Transformed politics and arts festival running in parallel with the Labour conference, Mr McDonnell warned “the establishment” would attempt to resist the party’s “radical” policies.
Pressure on Labour to change course over Brexit will see activists take to the streets of Liverpool for a march and rally demanding a so-called People’s Vote.
More than 100 constituency parties and trade union branches have submitted bids for the referendum issue to be put to a vote in Liverpool.
Labour leader Jeremy Corbyn has resisted such calls, preferring to press for a general election if – as many MPs expect – Theresa May is unable to get a Brexit deal through Parliament.
And Mr McDonnell signalled the party’s position in that event would be unchanged from last year’s snap election.
“We would be in the same situation there, where we would be saying we’re accepting that original vote, this is the sort of deal that we want,” he told The Guardian.
“The debate around the next manifesto will go on, but I really worry about another referendum.
“I’m desperately trying to avoid any rise of xenophobia that happened last time around, I’m desperately trying to avoid giving any opportunity to Ukip or the far-right. I think there’s the real risk of that.
“We’re not ruling out a people’s vote, but there’s a real risk, and I think people need to take that into account when we’re arguing for one.”
But former foreign secretary David Miliband told Today: “It’s an absolute dereliction of duty in my view for the Labour Party leadership not to embrace the fundamental principle that since the Brexit that people were sold two years ago is not available, it’s essential that the Brexit deal the Prime Minister does is put to people.”
Meanwhile, Mr Corbyn was given a rousing reception at the women’s conference, where he told delegates: “The Tories may talk about equality, they may say their Government delivers for all, but the lived experience of women in Britain tells a different story.
“Labour is the party of equality, the party of women, the party committed to measuring all our policies on their impact on women in society.”
But he acknowledged shortcomings in Labour’s handling of allegations of sexual harassment and abuse in the party, admitting: “We have not always met necessarily the highest standards, which rightly are demanded of us.”