In an announcement timed to cause maximum embarrassment for the Labour leader, Andy McDonald quit as shadow employment secretary, saying his position had become "untenable". He accused the party's leader of having created more division within the party and failing to promote socialist pledges.
The resignation of Mr McDonald is a bitter blow to Sir Keir who had been hoping to use this week to make the case for a Labour Government.
The Labour Party is currently gathered in Brighton for its annual conference.
It is the first time Sir Keir has been able to address party members in person since taking over as leader due to the coronavirus crisis.
Mr McDonald, who also served under Sir Keir's predecessor, Jeremy Corbyn, said the leader's office had instructed him to argue against a national minimum wage of £15 per hour and against statutory sick pay at the living wage.
"This is something I could not do," Mr McDonald wrote in his letter to the leader.
He added: "I joined your frontbench team on the basis of the pledges that you made in the leadership campaign to bring about unity within the party and maintain our commitment to socialist policies.
"After 18 months of your leadership, our movement is more divided than ever and the pledges that you made to the membership are not being honoured.
"This is just the latest of many."
In response to Andy McDonald's resignation, Labour leader Sir Keir Starmer said: "I want to thank Andy for his service in the shadow cabinet.
"Labour's comprehensive new deal for working people shows the scale of our ambition and where our priorities lie.
"My focus and that of the whole party is on winning the next general election so we can deliver for working people who need a Labour government."
Labour members on the Left of the party have accused Sir Keir of attempting to move away from his election pledges.
They say he has moved towards the centre-ground, failing to continue to promote the policies first advocated by Mr Corbyn.
The resignation comes after bitter internal party rows had already dominated the conference.
Sir Keir Starmer split opinion as he sought to change the rules which will elect his successor.
Labour delegates narrowly voted in favour of increasing the number of MP nominations necessary for someone to stand as leader of the party.
Rules to make it harder for local members to deselect their MPs as candidates at elections were also introduced.
The conference has also been marred by a row over comments made by deputy leader Angela Rayner at a drinks reception with party members.
Late on Saturday night, the Ashton-under-Lyne MP launched into a tirade against "Tory scum", accusing the party of being "homophobic, racist, misogynistic".
Conservative Party chairman Oliver Dowden seized upon Mr McDonald's resignation to accuse Labour of being "divided and fighting among themselves".
"Now they are even resigning during their own party conference," he added.
"Labour's conference gets more chaotic by the minute. How can people trust them to run the country?"