Last week Labour called a post by Te Pāti Māori MP Tākuta Ferris racist, after he criticised people helping Labour campaign for the Tāmaki Makaurau seat.
Te Pāti Māori has apologised for its MP's social media post and instructed him to remove it.
Labour leader Chris Hipkins told Morning Report the comments Ferris made had no place in government.
"If that reflects the position that the Māori Party will be campaigning on, then that's going to be very, very difficult for Labour to work with," he said.
"If, on the other hand, they embrace a more inclusive approach that says that the role of government is to govern for all New Zealanders, then, you know, we may well be able to find a lot more common ground."
He said Te Pāti Māori had some decisions over the next year or so about what kind of influence they would want to be if they wanted to be part of government.
"We support all people supporting Māori in this campaign," Te Pāti Māori said at the time.
Te Pāti Māori party said the comments came off the back of a "raw and difficult few weeks", after the loss of Takutai Tarsh Kemp.
"Our team has been in the trenches, feeling the weight of constant attack and pressure, and sometimes that hurt spills over in ways that do not reflect who we are as a kaupapa or leaders."
Hipkins said he was disappointed Labour lost out on the Tāmaki Makaurau seat at the weekend.
Labour's Peeni Henare was beaten by Te Pāti Māori's Oriini Kaipara in the Tamaki Makaurau by-election by a clear margin.
Hipkins said it was hard for Labour to overcome Te Pāti Māori's narrative that with Labour's candidate already in Parliament, voting for their candidate effectively gave voters two for the price of one.
He said Labour had work to do in the Māori electorates.
