Left-winger John McDonnell today withdrew from the contest to become Labour leader, after failing to secure enough nominations from fellow MPs.
Mr McDonnell's announcement came just three hours before the deadline for candidates to gather 33 nominations in order to claim a place on the ballot paper for the September 25 election.
His withdrawal raises the possibility that his 16 nominators may switch their backing to Diane Abbott to ensure the presence of a left-wing voice alongside David Miliband, Ed Miliband and Ed Balls, who have already passed the threshold.
Shadow health secretary Andy Burnham, who has 31 nominations, is also expected to squeeze onto the starting line today.
In a statement, Mr McDonnell said he was pulling out at the last minute "in the hope that we can at least secure a woman on the ballot paper".
Mr McDonnell admitted that he had failed in a last-ditch effort yesterday to persuade the party authorities to change the contest rules to allow both him and Ms Abbott - who has 11 nominations - to stay in the contest to succeed Gordon Brown.
He had proposed that the nominations threshold should be lowered from 12.5% to 5% of Labour MPs - reducing the number needed from 33 to 13.
In a statement today, Mr McDonnell said: "I stood for the Labour leadership as the candidate of the Left and trade union movement so that there could be a proper debate about Labour's future in which all the wings of the party were fully represented.
"It is now clear that I am unlikely to secure enough nominations and so I am withdrawing in the hope that we can at least secure a woman on the ballot paper.
"Yesterday I wrote to Harriet Harman to urge her to use her position as acting leader in association with the party's national officers to secure a reduction of the qualifying threshold for candidates to be allowed onto the ballot paper.
"Regrettably this has not occurred and so I have no other option but to withdraw in the interests of the party.
"I know that many Labour activists and trade unionists will be disappointed that their candidate will not be on the ballot. I am urging them to continue the fight for democracy within the party so that in future leadership elections rank and file members will be represented by the candidate of their choice."
His move came as the chair of Labour's ruling National Executive Committee Ann Black warned that there was "widespread concern" among the party membership that the leadership contest will be a narrow debate between similar candidates.
Even if Mr Burnham gets onto the ballot paper, Labour's electoral college of MPs, MEPs, trade unionists and activists will still be presented with a choice between four white, male, Oxbridge-educated former political advisers who held ministerial office in the Blair and Brown administrations.
In a letter to Parliamentary Labour Party chair Tony Lloyd, which he is understood to have distributed to the party's MPs, Ms Black said the question of who can take part in the contest was now "entirely in the hands of Labour MPs" and urged them to respond to the "groundswell of feeling" among grassroots activists.
The letter is likely to increase pressure on MPs who have not yet nominated a favourite to give their support to Ms Abbott to ensure that there is a left-wing choice on the ballot paper.
MPs do not have to support the candidate they have nominated when it comes to the final ballot.
Ms Black said she had been approached by many Labour members who were worried that the leadership contest will not deliver "the broadest possible debate".
And she warned that this could damage the party's prospects in the same way that Gordon Brown's unopposed "coronation" in 2007 is perceived to have done.
"This is not just about choosing an individual," warned Ms Black. "It is about the flavour of the contest, and the opportunity to debate the full range of ideas, policies and directions for the future, before thousands of members and millions of affiliated trade unionists cast their votes.
"If the choice is between three or four white male ex-ministers in their 40s, however able, it will be seen as lacking the full range of diversity which Labour seeks to reflect.
"If, however, it is extended in terms of gender, race, political perspective, the hustings through the summer will generate greater interest and engagement from party members, supporters and voters. And whoever emerges as the winner will have a far stronger mandate to lead than if the system can be portrayed as rigged in their favour."
In an interview with website Labour Uncut, Ms Abbott said it would have been easier for her to join the leadership contest if Mr McDonnell had never stood.
"I'm on the left, and have as good a voting record on left-wing issues as John McDonnell, but there's another issue which is about gender," said the Hackney North and Stoke Newington MP.
"It's not so much that I stood against John, but that John stood against me.
"I think it would have been easier if he hadn't stood... Initially, it was very difficult for either of us to gain momentum. If there'd been just one of us standing then that person would have gained momentum much quicker."