Ireland East MEP Nessa Childers has resigned from the Parliamentary Labour Party and will join fellow Labour members in opposition to campaign for Labour policies.
"I entered politics to help people, and am now resigning from the PLP because I no longer want to support a Government that is actually hurting people", Ms Childers said in a statement.
She accuses the Government of implementing harmful conservative policies.
The MEP also said she was dismayed by recent statements from Labour ministers that insist there is no alternative to current Government policies.
Ms Childers also suggests people will leave Labour to pursue its values.
She accuses the party leadership of attacking people who are loyal to the party's policies, while being more comfortable pursuing polices that protect the more privileged.
Ms Childers will continue to be a member of the Labour Party.
Labour TD for Dublin South East Kevin Humphreys said Labour members need to stay within the PLP if they are to have an influence on government.
Speaking on RTÉ's News at One, Mr Humphreys said said there is a difficult budget on the way, but "but Nessa is going to have little or no influence on that budget because she stepped off the pitch".
Mr Humphreys also rejected Ms Childers' allegation that Labour had sold out on the party's core values while in Government, saying that she was "not helping anybody" by being on the sidelines.