One frontbencher said the PM's guidance would leave families with an 'impossible choice' on Monday morning.
'It allows an environment where it’s permissible to racially mock Chinese and east Asians. It’s so disappointing.'
Lisa Nandy is currently trailing in the polls in the Labour leadership contest.
'We should have been bold enough to defend free movement and the opportunities and benefits that it brings,' said the leadership hopeful.
Lisa Nandy voted in favour of the deal in October but now says there is no chance of Labour MPs negotiating access to the customs union.