Heidi Alexander, who was appointed by the party's new leader Jeremy Corbyn two weeks ago, told a meeting at Labour's annual conference in Brighton that private providers could continue to play a role in the NHS, but only in 'very, very limited circumstances'.
Ms Alexander told the Health and Care Forum fringe event in Brighton that while not for profit or third sector providers could continue to provide services, there was a 'real difference' between them and the private sector.
'I believe there is a deep cynicism out there among the public about the involvement of private companies in the delivery of NHS services,' she said.
People wanted to know tax money was going into care and not shareholders' pockets, Ms Alexander said.
But, she added: 'If there is a case where private sector involvement in very, very limited circumstances can reduce waiting times and capacity, and it offers value for money ... I think in a very, very limited set of circumstances it's justifiable.'
She described a situation where a private hospital could provide treatment for the NHS more quickly than an NHS provider.
'In those sorts of situations there is a role for the private sector,' she said.
Ms Alexander, who was a leading figure in the campaign against the downgrading of services at Lewisham hospital in her south-east London constituency, said health secretary Jeremy Hunt does not see 'any limit to the involvement of the private sector in the NHS.'
She indicated the new leadership would continue some of the policies of her predecessor Andy Burnham. Ms Alexander said she supported the repeal of the controversial section 75 of the health and social care act which regulates the tendering of NHS services.`
She described Mr Burnham's 'whole person care' policies to integrate the health and social care systems as a 'fantastic starting point' and 'foundation' to work from. Integrating services, she said, would be a priority for her.