Labor says marriage equality is still achievable in the current Parliament if politicians are allowed a free vote to allow same-sex marriage.
It comes after the Opposition unanimously decided to vote against the government's proposed plebiscite because of its cost and potential harm it would cause gay teenagers.
Shadow attorney-general Mark Dreyfus moved a motion in caucus to oppose the plebiscite bill, which was seconded by Terri Butler.
No one spoke against the recommendation and it was carried unanimously.
Labor leader Bill Shorten told the meeting a series of consultations had been held over the past few weeks with mental health experts and other stakeholders.
The overwhelming response had been sincere and straightforward: "Please do not support this divisive, expensive and unnecessary plebiscite, just get on with it and get the parliament to do its job".
Mr Shorten later said mental health experts and families had expressed concern the plebiscite would harm young gay and lesbian people.
"Having met these families, having listened to their stories, I could not in good conscience recommend to the Labor party that we support the plebiscite about marriage equality," he told reporters at Parliament House.
"The plebiscite is a bad idea," Mr Shorten said.
"Us stopping a bad idea is a good thing."
The Turnbull Government plebiscite proposal would have allowed a national, non-binding public vote for Australians.
"Why should a couple in a committed relationship have to metaphorically knock on the doors of 15 million of their fellow Australians and see if they agree with it?" the Opposition Leader asked in a meeting with rainbow families in Parliament.
Labor says it is ready to immediately take part in a free vote which would legalise same-sex marriage.
"The easiest way is the way which this Parliament has done for a hundred years: legislate, debate it."
The government now lacks the support it needs to pass the plebiscite’s enabling legislation through the Senate – where crossbench Senators have vowed to block it.
With Labor now opposed to a plebiscite and the government refusing to back away from it, there is now a political stalemate over how to achieve changes to the Marriage Act.
Attorney-General George Brandis implored Labor to support the plebiscite bill in Parliament this morning before the Opposition meeting.
“Stop playing politics with gay peoples’ lives,” Mr Brandis told reporters.
“There is only one path forward for this because that is the position we took to the election and we intend to keep our promise.”
Over the last few weeks, Labor has grown increasingly distant from the plebiscite.
“It is our job as legislators to reflect the views of our communities,” Deputy Opposition Leader Tanya Plibersek said.
“That’s our day job; that’s what we’re paid to do and the notion we can’t do it on this one issue is ridiculous,” she said.
