Labour's shadow children's minister Steve McCabe told CYP Now that government needs to "come clean" on funding arrangements for Kids Company and its involvement in the closure.
His colleague Jon Ashworth, the party's shadow Cabinet Office minister called for an official probe, saying "serious questions" need to be asked of government about how the charity, which closed on Wednesday evening, failed.
"If they were worried about Kids Company [prior to closure], why didn't they act to put it in a sustainable footing," Ashworth said to the BBC.
"Let's have an inquiry and let's get the answers."
News of the closure of Kids Company on Wednesday came just weeks after chief executive Camila Batmanghelidjh agreed to step down in order to secure £3m in Cabinet Office funding to enable the organisation to restructure.
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