Angela Eagle has withdrawn from the contest for Labour's leadership in order to back Owen Smith as a "unity candidate" to challenge Jeremy Corbyn.
Ms Eagle was the first to mount a public challenge to the Labour leader, but decided to withdraw after it became apparent that Pontypridd MP, Mr Smith, had secured more nominations from party MPs and MEPs.
Mr Smith has obtained nominations from 88 Labour MPs and two MEPs to become a leadership candidate, easily clearing the 51 hurdle to get his name onto the ballot paper.
Among his nominators is former party leader Ed Miliband.
Incumbent leader Mr Corbyn was not required to secure nominations to take part in the contest, following a ruling by the party's National Executive Committee.
Ms Eagle said that while there had been "quite a narrow gap" in support among Labour MPs for her and Mr Smith, she had concluded it was in the best interests of the party that she dropped out.
When I looked at the results I didn't think it was in the interests of the party that this carried on.
Mr Smith will now go forward to fight Mr Corbyn in a ballot of party members and supporters which ends on September 24.
Speaking at Westminster, Ms Eagle said she would be backing Mr Smith in the contest, adding: "We are in lock-step together, arguing for a united Labour Party."
The Labour conference has voted to give the Welsh party more autonomy, despite opposition from supporters of Jeremy Corbyn.
Paul Flynn, the Welsh Labour MP appointed to the Shadow Cabinet after others resigned, wants them to return "with dignity and respect"
Welsh Labour could get more autonomy from the UK party. A package of measures could be passed at the party's conference in Liverpool