Jeremy Corbyn has lost a no confidence motion with more than 80% of MPs voting against him.
A total of 172 MPs voted for the motion with 40 MPs voting against with a turnout of 95%.
Sky's Faisal Islam said that there was a rush at the end of the voting period with several of Mr Corbyn's supporters registering their vote in the House of Commons in a bid to send a message that he will run in a leadership election if challenged.
The channel's senior political correspondent Sophy Ridge says she understands former shadow business secretary Angela Eagle is likely to stand against Mr Corbyn but is waiting until tomorrow in case there are any other developments.
The confidence vote is not binding on Mr Corbyn to stand down as Labour leader but will pile further pressure on him after more than 40 members of his shadow cabinet and ministerial team resigned over the weekend and on Monday.
Islam said the MPs who voted against him are gambling that the huge majority Mr Corbyn received during the last leadership election will not be there following the UK's vote to leave the EU.
He said: "For many, he didn't do enough in this European referendum.... His ambivalence, his lack of enthusiasm for the European union helped create among a certain Labour voter a bit of confusion ... and that has motivated a move like this.
"The bigger point is the prospect of a Boris Johnson-led Conservative Party and the possibility of a general election has fired the parliamentary Labour Party into action.
"They have laid down the gauntlet now to the membership and the calculation comes down to this - has the Labour membership changed."
Mr Corbyn responded quickly with a statement that said: "I was democratically elected leader of our party for a new kind of politics by 60% of Labour members and supporters, and I will not betray them by resigning.
"Today's vote by MPs has no constitutional legitimacy.
"We are a democratic party, with a clear constitution. Our people need Labour party members, trade unionists and MPs to unite behind my leadership at a critical time for our country."
Shortly after his statement, three more shadow ministers and two parliamentary private secretaries became the latest on his team to resign.
Former Home and Foreign Secretary Jack Straw described the current crisis as the worst to affect the party since at least 1935, if not ever.
He said: "Mr Corbyn's position is wholly untenable. The Labour Party exists to implement its values through a parliamentary majority and to its members of Parliament.
"Whatever electoral system you have, if Members of Parliament of your own party lose confidence in you, to this degree and this publicly that you cannot continue as a leader."
Labour MPs began voting in the non-binding secret ballot at 10am on Tuesday.
Earlier, video showed an awkward first meeting for Mr Corbyn's new cabinet.
In the footage, Mr Corbyn is unhappy with the presence of cameras and asks them to be removed until later in the meeting.
So far, 19 members of the shadow cabinet have resigned, 28 shadow ministers have quit and eight parliamentary private secretaries have left their positions, all after shadow foreign secretary Hilary Benn was sacked overnight on Saturday.
Also resigning was former Bank of England MPC member Danny Blanchflower who quit Labour's BoE review, along with several other review members.
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