Diane Abbott has promised to stay on as an MP for “as long as it is possible”, setting up a likely clash with Keir Starmer after a deal for her to retire from parliament broke down.

Abbott, the UK’s first female black MP, had been set to make a “dignified exit” from parliament, following a near 40-year career, in an arrangement in which she was given back the Labour whip after an investigation into comments she made about racism.

The deal appeared to collapse after an unknown Labour source briefed journalists that Abbott would nonetheless be barred from standing again in her Hackney North and Stoke Newington constituency, prompting fury from her allies at her treatment.

Starmer denied on Wednesday that she had been barred, but speaking to supporters outside Hackney town hall in east London, Abbott said she was not going to allow herself to be “intimidated or frightened”.

She continued: “I promise you that, as long as it is possible, I will be the member of parliament for Hackney North and Stoke Newington.” She tweeted earlier on Wednesday that she would be “campaigning for a Labour victory”.

The controversy is the first serious setback in what has otherwise been a smooth start to Labour’s campaign to oust the Conservatives, which has seen complaints from the left over internal factionalism.

In what is likely to be seen as another attack on the party’s left, the Brighton Kemptown MP, Lloyd Russell-Moyle, said on Tuesday evening that he had been suspended by Labour and would not be allowed to stand in the election.

Starmer insisted no decision had been made about Abbott, who was first elected in 1987. But it has long been assumed that Labour want the 70-year-old, who was Jeremy Corbyn’s shadow home secretary, to stand down, and are believed to have lined up potential replacement.

Abbott’s public declaration that she will fight on presents the Labour leadership with a conundrum: allow her to stand again, or forcibly push out a totemic figure in the party who Starmer has described as a “trailblazer”.

Sources said that before the leak about her being barred, Abbott had indicated she was willing to step down and had discussed the choreography of her announcement with the party, as she was nervous that her departure could be characterised as part of a purge of the Labour left.

The Guardian has been told that Abbott received a letter from the Labour chief whip, Alan Campbell, confirming the whip had been restored and reassuring her that she could make what was described as a “dignified exit”.

She was also said to have had a meeting with Starmer’s political director on Wednesday morning, hours before journalists were briefed that she had been barred from standing again. It is understood that she feels the Labour leadership has gone back on the deal.

The anonymous briefing has plunged the reinstatement process into chaos, prompting Abbot to declare herself dismayed, while a series of Labour MPs and others criticised the way she had been treated.

In a statement, Russell-Moyle, who has been an MP since 2017, said a complaint had been made about him which he believed to be “vexatious and politically motivated”, and which he denied, meaning he had been suspended from the party.

“There isn’t enough time to defend myself as these processes within the party take too long, so the party have told me that I will not be eligible to be a candidate at the next election,” he said, adding: “I’m gutted.”

Labour confirmed that he had been suspended. A spokesperson said the party “takes all complaints extremely seriously and they are fully investigated in line with our rules and procedures”.

On Abbott’s case, Simon Woolley, the campaigner and co-founder of Operation Black Vote, said Labour had “about 48 hours to get this right”. He told the BBC: “I think they’re in danger of not only disrespecting one of the most popular MPs in modern times, but also if they get this disrespectfully wrong, it’ll also be a slap in the face for Britain’s African and Caribbean communities.”

The Runnymede Trust charity, which campaigns for racial justice, called her treatment “abhorrent”. A group of six Labour-affiliated trade unions, including Unite, wrote a joint letter to Starmer demanding she be allowed to stand again, as did a series of MPs from the left of the party.

Abbott was suspended from the party last year after writing a letter to the Observer saying that Jewish people and Travellers suffered prejudice but not racism, comparing their experiences to those of people with red hair.

Abbott apologised for her remarks, but was placed under investigation and lost the Labour whip.

It only emerged this week that the inquiry by Labour’s national executive committee into her comments was completed in December. Abbott was given a formal warning with an instruction to complete an online antisemitism training course in February.

Despite being questioned about Abbott’s case several times recently, Starmer did not say the inquiry was completed, and declined to say if she would be allowed to stand again.

Asked about the situation on Wednesday, Starmer said it was “not true” she had been barred, but gave no further details, saying it had not yet been decided who would stand in the seat.

“Naturally I am delighted to have the Labour whip restored and to be a member of the PLP [parliamentary Labour party],” she tweeted. “Thank you to all those who supported me along the way. I will be campaigning for a Labour victory.”