Rachel Reeves, the shadow Cabinet Office minister, told the BBC’s Andrew Marr Show that the social network needed to “take responsibility” for prejudice on its platform.
Labour’s boycott makes it the first political party in the world to stop advertising on Facebook.
It comes after reports in The Sunday Times suggested Labour would emulate Coca-Cola, Lego and Adidas in suspending all adverts on the site.
“Is it really true that Labour is boycotting Facebook. And if it is, why?” host Marr asked Reeves.
“All MPs in the Labour Party use Facebook to get across our message. But what we’re not doing at the moment is advertising on Facebook,” she replied.
“And that is in solidarity with the Black Lives Matter campaign, but also in line with what many businesses are doing this month, which is to express our concerns about the failure of Facebook to take down some hateful material from their platforms and to take more responsibility for the lies and the propaganda that is sometimes put out there on Facebook.
“Facebook need to do more to take responsibility and this is just one way that businesses and the Labour Party and others can put pressure on them to do the right thing and take tougher action on hate crime and hate speech.”
Labour reportedly spent more than £1.2 million on advertisements on Facebook during last year’s general election.
Earlier this month, it was suggested almost a third of advertisers are considering joining a month-long boycott of the social network to take action against hate speech.
A survey by the World Federation of Advertisers showed that a third of the top 58 advertisers will, or are likely to, suspend advertising, while a further 40% are also considering doing so.
The “Stop Hate for Profit” boycott was promoted by a coalition of US-based charities and called for companies to suspend their spending on the platform for the month of July.
But a number of firms have already signalled their intention to extend the advertising ban further into the year if no action is taken by Facebook.