Luciana Berger, the Liverpool Wavertree MP, said she had become “embarrassed and ashamed” of representing the party, which she claimed was “institutionally anti-Semitic”.
Ms Berger was joined by fellow MPs Chris Leslie, Gavin Shuker, Mike Gapes, Angela Smith, Ann Coffey, and Chuka Umunna to join an independent group in the House of Commons.
Mr Leslie said Labour had been “hijacked” by the far left, and claimed the party leadership had betrayed its membership by failing to back a Brexit deal that includes membership of the EU single market.
The Nottingham East MP added that Jeremy Corbyn’s hostility to business and NATO flowed from a “narrow, outdated ideology”.
No Scottish Labour MPs are involved in the breakaway group.
Mr Umunna, who was briefly a candidate for leader of the Labour Party, encouraged members of all parties angry at the conduct of politics to support their group.
Established parties “can’t provide the change because they have become the problem,” Mr Umunna said, adding: “If you’re sick of politics as usual - so are we.”
The MP for Streatham in London said: “We invite you to leave your parties and forge a better politics.”
Responding to the resignations, Mr Corbyn said: “I am disappointed that these MPs have felt unable to continue to work together for the Labour policies that inspired millions at the last election and saw us increase our vote by the largest share since 1945.
“Labour won people over on a programme for the many not the few – redistributing wealth and power, taking vital resources into public ownership, investing in every region and nation, and tackling climate change.
“The Conservative Government is bungling Brexit, while Labour has set out a unifying and credible alternative plan.
“When millions are facing the misery of Universal Credit, rising crime, homelessness and poverty, now more than ever is the time to bring people together to build a better future for us all.”
SNP Westminster leader Ian Blackford said: “If even his own MPs can’t trust Jeremy Corbyn then why should the people of Scotland?
“Ultimately this split will strengthen Theresa May and make it even more likely that the Tories stay in power through Brexit and beyond.
“Westminster is now completely dysfunctional, with warring factions on both sides of the house more interested in their own bitter disputes than the future of the country.
“It is increasingly obvious that decisions about Scotland need to be taken here in Scotland and not at Westminster.”