Labour leader David Shearer is refusing to rule out sanctions against David Cunliffe's supporters, after winning unanimous backing at a crisis caucus meeting.
Mr Shearer emerged after an hour and a quarter to say he had stripped Mr Cunliffe of his economic development and associate finance roles and banished him to an unranked slot on the back bench.
"His actions at the weekend were disappointing, not only to me but to many party members. That, along with his repeated failure to quell speculation about the leadership, means that I no longer have confidence in him. He has lost my trust."
Mr Shearer urged him to "reflect on his ability to play a part in our team".
"David Cunliffe is a talented MP and it is possible there is a road back for him." But he would first have to demonstrate his loyalty.
However, Mr Cunliffe said pointedly on his Facebook page that he was not at liberty to comment, even to say he wanted to work with supporters "for a better New Zealand".
Mr Shearer said he had no plans to demote any of Mr Cunliffe's backers, thought to number fewer than 10 by yesterday.
"I want to sit down with them and see where they are going in the future. I have no plans at the moment, but that will be done in my own time if that was to come."
Party sources expected a reshuffle to be announced before Parliament resumed on Tuesday.
It is understood Mr Shearer is balancing the need to further stamp his authority with the requirement to reunify his caucus.
Meanwhile, he has clamped down on any dissent emerging after yesterday's caucus meeting, winning a resolution by MPs that he would be the only one to speak about it.
Party president Moira Coatsworth even refused to comment when asked if the party was united behind the caucus.
But on the way to the meeting finance spokesman David Parker - a firm Shearer supporter - said Mr Cunliffe's actions at the weekend had been "destructive of himself and New Zealand's interests".
List MP Shane Jones suggested there was no alternative to disciplining Mr Cunliffe.
The party only had "one captain" and that was Mr Shearer. "I'm a Maori, I'm from the north, and when you build a whare, if you see a huhu grub you've got to toast it or roast it coz your whare will go pirau [rotten] and fall down."
The only MP to comment at length after the meeting, Mangere MP Su'a William Sio, said he was happy with the outcome but declined to comment on Mr Cunliffe's treatment.
"The people of Mangere have told me that we need to focus on the worsening economy, the high number of unemployment, the rising cost of living and we've got to get rid of National before things get worse than they are."
Mr Shearer said yesterday's vote had put speculation about his leadership to rest. He predicted he would also be endorsed in February, when party rules required another vote, "because I can count". He said he would still be leader until 2015, before correcting himself to say 2013.
At that vote Mr Shearer will need to win more than 60 per cent backing from the 34-strong caucus to avoid a run-off at which the wider party and unions have a say alongside MPs.
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