The education secretary is a close ally of Prime Minister Keir Starmer. Powell served as House of Commons leader until last Friday’s reshuffle, which was sparked by Rayner’s resignation.
Bell Ribeiro-Addy, seen as the most left-wing of the potential candidates, failed to gather enough nominations to make it to the next stage of the race.
Phillipson and Powell must now receive nominations from 5 percent of Constituency Labour Parties, or three organizations affiliated to Labour, two of which must be affiliated trade unions, before a ballot of members is held.
The contest comes at a tricky time for Starmer, who is under pressure following the departure of Peter Mandelson as British ambassador to Washington less than a week before Donald Trump’s second U.K. state visit, and ahead of Chancellor Rachel Reeves’ November budget.
The winner will be announced on October 25.