It means the party has gone from accepting the referendum result in its 2017 manifesto, to effectively committing to campaign against it, should there be another vote.
But what does this mean in practice, and will it quell the disquiet in the Labour ranks?
- What has Labour’s stance been so far?
It was a rocky road on the way to Mr Corbyn’s announcement on Tuesday.
Labour had accepted the referendum result in its 2017 general election manifesto.
But at last year’s party conference, it was overwhelmingly agreed that a fresh public vote had to be kept “on the table”.
- How have MPs applied pressure?
Shadow Brexit secretary Sir Keir Starmer won an ovation from delegates when he declared “nobody is ruling out Remain as an option”, before some fellow frontbenchers put the dampers on.
MPs raised fears that backing Remain would destroy support in Leave-voting constituencies.
In May, shadow foreign secretary Emily Thornberry called for Labour to campaign for a second referendum to stop a no-deal Brexit as she predicted “really bad” results in the European Parliament elections.
Deputy leader Tom Watson has been at the forefront of demands for Labour’s backing of a second referendum.
On Friday he called on Labour members to sign a declaration, piling pressure on it to become the “party of Remain”.
Shadow chancellor John McDonnell, who is typically a loyal ally of Mr Corbyn, also grew increasingly vocal in support of Labour taking a Remain stance.
At the weekend he urged the party to decide on its Brexit policy “sooner rather than later”, warning that the new prime minister could call a snap election.
- And what about the unions?
Just a day before the latest announcement, leaders of some of the party’s largest affiliated trade unions moved to back a second referendum.
Crucially, Unite general secretary Len McCluskey was among those present. He is a key ally of Mr Corbyn and has previously resisted calls for a confirmatory vote.
- Where does Labour stand now?
Following a shadow cabinet meeting, Mr Corbyn wrote to party members to say Labour would campaign for Remain “against either no-deal or a Tory deal”.
And he called on the next Conservative leader to hold a second referendum before exiting the EU.
But he but did not explain what Labour’s position would be if it won a general election. Could it hammer out a new deal and push for the public to back it?
It is understood Labour would answer that question ahead of a national vote when working on its manifesto with members, trade unionists and the shadow cabinet.
- Are Labour MPs now in harmony?
The decision won the backing of some key figures.
Mr Watson, Sir Keir and Brexit Select Committee chairman Hilary Benn were among those voicing praise.
But Brexit-backer John Mann warned that the decision could lead to the loss of Leave voters and that the move may give Tory leadership frontrunner Boris Johnson “quite a boost”.