Zarah Sultana has said she will call off legal action after a public row with Jeremy Corbyn over the fledgling party they were to co-lead.

The Coventry South MP acknowledged people felt “demoralised” after the quarrel over her push for members to sign up to Your Party, the political outfit she established with the former Labour leader.

Sultana, who had claimed she faced a “sexist boys’ club”, said she was “determined to reconcile” and was in talks with Corbyn.

“For the sake of the party, and as an act of good faith, I will not be pursuing legal proceedings despite the baseless and unsubstantiated allegations against me,” she wrote in a statement posted on X on Sunday.

“I know many people are feeling demoralised – I share that feeling. We find ourselves in a regrettable situation, but my motivation has always been to ensure the collective strength of our movement, put members first and build the genuinely democratic conference and socialist party we so urgently need.

“I am determined to reconcile and move forward. I am engaged in ongoing discussions with Jeremy, for whom, like all socialists of my generation, I have nothing but respect.”

On Friday, Sultana said she had instructed “specialist defamation lawyers” after she was “the subject of a number of false and defamatory statements” about her launch of a paid membership system.

It came after a message encouraging supporters of the outfit to sign up was disowned as an “unauthorised email” by Corbyn.

Sultana said she had taken the step because she had been “sidelined” and “effectively frozen out” by the former Labour leader and fellow independent MPs Ayoub Khan, Adnan Hussain, Iqbal Mohamed and Shockat Adam.

The MP added: “Unfortunately I have been subjected to what can only be described as a sexist boys’ club: I have been treated appallingly and excluded completely.”

Corbyn had previously urged people not to use the “supposed membership portal” and said legal advice was being taken over its launch.

The row is the latest in a series of disagreements between the two MPs over the direction of the party, which is yet to hold an annual conference or decide on an official name.

Sultana announced its launch in July before Corbyn appeared ready to confirm it.

But the party appeared to be building momentum, with Sultana claiming more than 750,000 supporters had signed up.

Sultana, who was suspended last year alongside six other Labour MPs for voting to scrap the two-child benefit cap, announced in July she was quitting Labour to set up a new political party.