Sir Keir Starmer is poised to withdraw the offer of a new job to his former chief of staff Sue Gray, according to media reports.
Ms Gray was due to take up a role as "envoy to the nations and regions", after she resigned from her position at the heart of Government in October.
This followed intense media speculation about turmoil at the heart of Downing Street.
The former chief of staff was said to be on a short break before taking up her new post, but reports across the media suggest the Prime Minister is now likely to rescind the job offer over concerns about what exactly the role would entail.
The Financial Times meanwhile said Ms Gray has now rejected the job.
"Sue has taken a decision not to take the role. She's going to focus on other things," an ally of the ex-civil servant told the FT.
They added: "She's taken time to think about it properly, talking to stakeholders, but ultimately she's decided she doesn't want to do it."
Previous reporting suggested Ms Gray was negotiating over the terms of the job and her exit from Downing Street.
Downing Street had previously described the envoy to the nations and regions as a "vital role in strengthening our relations with the regions and nations".
In the job, she would have acted as a go-between for ministers with devolved governments in Wales, Scotland and Northern Ireland, and regional mayors across England.
Downing Street said Sue Gray had "decided not to take up the role" as envoy to the nations and regions.
Asked whether the job offer was withdrawn or if Sir Keir Starmer's former chief of staff walked away, a Number 10 spokeswoman said: "As we said at the time, the appointment had been agreed and you had the focus for the new role and the original statements from both the Prime Minister and Sue Gray.
"Subsequent to that, we confirmed that she was taking a break between roles and taking up duties and, as I said, I can update that she has since decided not to take up the role."
Downing Street said there were "no plans" for further updates on whether the envoy position might be taken up by someone else.
The spokeswoman said: "We will keep that role under review in terms of ensuring we have the right processes and support in place for the Prime Minister, Deputy Prime Minister and CDL (Chancellor of the Duchy of Lancaster) given the priority that we place on the regions and nations.
"I don't have any immediate plans to update you on as to further recruitment, but to be very clear, resetting our relationships and working with the regions and nations has been at the heart of everything the Government does."
Asked why there were no plans to fill the role given it was previously described as "vital" to Government, Number 10 said Ms Gray had been "uniquely placed" to hold the position and repeated that the role would be kept "under review".
Ms Gray resigned from her role as Sir Keir's chief of staff almost six weeks ago, after finding herself at the centre of a political storm. Starmer shook up his entire top team after facing intense pressure to put an end to the hostile briefings that had at times overshadowed his first 100 days in office.
The senior official, who had spent decades as a civil servant and became a household name after Boris Johnson asked her to investigate the Partygate scandal, was replaced by Morgan McSweeney, who masterminded Labour's general election victory, and with whom she sometimes found herself at odds in government.
Downing Street announced at the same time that Ms Gray would take on a new government role as the prime minister's envoy for the regions and nations.
But she failed to attend Sir Keir's inaugural gathering of the council of nations and regions, intended to reset relationships and boost growth in every part of the UK.
After her appointment, Ms Gray said she was standing down as chief of staff because it had "become clear to me that intense commentary around my position risked becoming a distraction to the government's vital work of change".
In a statement, she added: "I am pleased to have accepted a new role as the prime minister's envoy for the regions and nations. After leading the Labour party's preparation for government and kickstarting work on our programme for change, I am looking forward to drawing on my experience to support the prime minister and the cabinet to help deliver the government's objectives across the nations and regions of the UK."
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