Independent MP Dr Gaurav Sharma says he is resigning from Parliament after claiming the Labour Party intended to force him out of Parliament.
But Jacinda Ardern says he is wrong and Labour "have not, and are not, considering invoking the waka-jumping provisions".
The Hamilton West MP, who was pushed out of the Labour caucus earlier this year after making allegations of a culture of bullying within the party, has written a lengthy statement on Facebook claiming Labour intends to kick him out of Parliament.
He says Labour plans to use the waka-jumping legislation six months before the next general election to force him out of Parliament, which would mean a by-election could be avoided. If an MP leaves Parliament within six months of an election, Parliament can choose not to hold a by-election.
"I have sincere concerns that this underhanded move will mean people of Hamilton West will have no voice in Parliament for six months preceding the next general election," Dr Sharma wrote.
However, he said he is "pre-empting" Labour's move and will resign.
"This will trigger a by-election, giving the people of Hamilton an opportunity to not lose their democratic rights of having a voice in Parliament by underhanded tactics of the Government and the Labour Party."
But in a statement, Ardern, the Labour leader, said the party's position on Dr Sharma and the waka-jumping legislation has not changed.
"We have not, and are not, considering invoking the waka jumping provisions, nor do I know the basis of Gaurav Sharma's speculation," she said
"Gaurav may wish to reconsider his decision given he is unnecessarily costing the taxpayer hundreds of thousands of dollars to trigger a byelection he then intends to stand in. We consider it unnecessary and wasteful given the general election is scheduled for 2023."
Dr Sharma said he will run as a candidate in the by-election and will launch a new "centrist party". He wants to "send a message to the Government that you can't silence the voice of the common man".
"These are not easy decisions but given the numerous areas where Government has failed us it is important that we hold our Government (of any colour) accountable. I will publish more details about the new party in due course."
He said he expected Labour to "spin my decision by talking about the cost of the by-election". Many Labour MPs have triggered a by-election in the past, Dr Sharma said.
In his statement, Dr Sharma made claims about Labour minister Michael Wood. He said after being expelled from the Labour caucus, Wood told him Labour would "destroy my political career" and that the minister was "calling event organisers advising them to cancel invitations extended to me". He could not provide Newshub with any evidence to back up the claims.
A spokesperson for Wood told Newshub: "These allegations are simply not true."
The former Labour MP was kicked out of the party's caucus in August after making unfounded claims of bulllying, accusing the Prime Minister of conducting a cover-up and the party of teaching politicians how to get around freedom of information laws.
Dr Sharma hasn't provided any evidence of being bullied or that there are widespread workplace culture issues. The MP has, however, released recordings and screenshots of private conversations he believes shows he has support within the caucus.
Labour's denied his allegations, saying the situation has arisen from Dr Sharma taking issue with interventions from the Parliamentary Service and whips to resolve staffing issues in his office.
After being expelled from the Labour Party caucus, Dr Sharma said he hadn't decided whether he would resign from Parliament.
"It's not a decision I want to hurry either way. Obviously my constituents will have stuff to say about it. I've obviously been hearing from them in the last few days. So that's not something that I'm going to rush either way."
Ardern said it was "best to avoid" by-elections.
"It does cause unnecessary disruption and focus of resource into contest outside of an election cycle and it does it does come at a cost," Ardern said at the time.