Labour MEP Nessa Childers has written to Tánaiste Eamon Gilmore confirming her resignation from the party.
It brings to 20 the number of Labour politicians to quit the party since the last General Election.
She says Labour is allowing Fine Gael to pursue endless austerity policies which go against the party's core values.
"The policy of austerity is discredited in Europe and, increasingly, at home," she wrote, saying those policies are a "profoundly immoral way to run our country".
Ms Childers said she had increasingly found herself discouraged and prevented from advocating a distinctive social democratic position within the Labour party.
"While I have remained constant in my views, the Labour leadership has drifted away from a progressive policy approach," she wrote.
"My attitude is vilified as disloyal or opportunistic when, in fact, I am defending and promoting the party’s core values."
She said a "low point" for her was feeling abandoned by the party leadership for opposing the appointment of Kevin Cardiff to the EU Court of Auditors.
Ms Childers says she'll run in next year's European elections as an independent candidate within the European Socialists and Democrats Group.
The MEP for Leinster resigned from the Labour Parliamentary Party in April.