The Labour Party is “truly in danger of splitting apart”, shadow Work and Pensions Secretary Owen Smith has said, as he urged MPs to allow time for crisis talks between Jeremy Corbyn and Tom Watson to succeed.

In a statement issued on Thursday morning, Mr Smith – who is tipped as a potential leadership contender – did however hint that he would challenge Mr Corbyn if necessary, saying: “I stand ready to do anything I can to save and serve the party.”

It came as Unite union boss Len McCluskey arrived in Westminster to broker further talks between senior Labour figures over Mr Corbyn’s future. The Labour leader was last week rocked by the resignation of most of his frontbench and a vote of no confidence that was backed by 172 MPs, and calls to resign from across the party.

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However, Mr Corbyn has stood firm, backed by shadow Chancellor John McDonnell and the major unions, who argue that he has an overwhelming mandate to lead from Labour party members. In a bid to break the deadlock, talks have been held between Mr Corbyn and Labour’s deputy leader Tom Watson.

Mr Watson, along with many MPs, has said he considers Mr Corbyn’s position to be untenable. Mr Smith has suggested that this weekend could be crucial, and urged MPs to allow talks to progress.

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“Over the last week, I have been contacted by hundreds of Labour members and MPs deeply worried that the Labour Party is truly in danger of splitting apart. I share those fears and call on everyone in our movement to do all we can to avert such a disastrous outcome,” Mr Smith said.

“I stand ready to do anything I can to save and serve the party. Yesterday, I spoke directly with Len McCluskey of Unite and met with our leader, Jeremy Corbyn, to explore what I can do to try and heal the rifts that have opened up in our movement. On behalf of the trades unions, Len has reassured me that the talks he has opened up between Jeremy and Tom Watson have been productive and has asked that they are given more time this weekend to see what further progress can be made towards a resolution.

“Jeremy has also reassured me that he is engaging in talks with an open mind. I believe that all of us whose priority is to restore unity in the Labour movement and give us a chance to defeat our only true enemy, the Tories, should give these talks every chance to succeed. That is what I intend to do and I urge all my colleagues to do likewise.”

So far only former Shadow Cabinet member Angela Eagle has publicly said she will challenge Mr Corbyn in a leadership contest if he does not stand down. However, Mr Smith is understood to be considering a bid. Ms Eagle’s own challenge suffered a setback yesterday after party members in her constituency overwhelmingly voted to support Mr Corbyn.