The party's National Executive Committee (NEC) will now choose the six people to represent its six wards in the local elections in May.
This comes as MP for Bradford Naz Shah is accused of ageism for allegedly telling one council hopeful that he was too old to stand during a meeting at his house.
While Labour confirmed Ms Shah did visit 58-year-old Soofi Amin at his home in Girlington, Bradford, she strongly denies his claim that she asked him: 'why do you want to be a councillor at this age?'.
Mr Amin, a part-time driver who takes pupils to school, has complained to the Yorkshire and Humber regional office.
He said he was shocked he was asked about his age and he had campaigned for Ms Shah during the General Election to help her beat Respect Party politician George Galloway.
"I'm 58, I wouldn't call myself old. I said, 'you have no right to say those things to me'. I said 'Naz, you're not doing the right thing here'," said Mr Amin, who has lived in the city for 40 years after arriving from Kashmir and has previously represented the Manningham ward for Labour.
A spokesperson for Ms Shah said: "The allegation is completely baseless and other people who were present at the conversation remember it very differently."
It was announced earlier this week that the NEC will now make the final decision on who will represent Labour in the May local council elections in Bradford West.
A spokesperson for the Yorkshire and the Humber Labour Party said: “After receiving allegations surrounding the process of selecting candidates in wards of the Bradford West constituency to contest the May 2016 local authority elections, the National Executive Committee of the Labour Party has today ruled that the selection of candidates in the six wards that make up the Bradford West constituency will be made by a panel of the NEC.
"Party members continue to select candidates in all other parts of Bradford.”
Bradford West MP Naz Shah said she welcomed the ruling by the NEC to make sure there's a 'high calibre' of candidates, and the local party reaches standards of 'transparency'.
She said: "I have said consistently since being selected as Labour’s candidate for Bradford West, and since serving as MP, that I am determined to see our local party renewed and reach the standards of transparency and inclusivity that members and our constituents deserve.
“We have great councillors here and a Labour Group doing a fantastic job of running Bradford Council – bringing in investment, finally seeing the wonderful Broadway shopping centre open, getting hundreds of people into work with the Get Bradford Working scheme, improving transport links and acting to try and tackle health inequality.
“We must make sure we have high calibre candidates selected in such a way that they can carry the confidence and support of local people, so that Labour makes the gains at May’s local elections I’m confident we will achieve.
“I hope local members come together to work towards backing the candidates selected and securing victories for Labour here in May.”
This latest incident follows a dysfunctional history for the Labour Party in selecting people to stand in Bradford West.
Last year Amina Ali, who had been originally selected to fight George Galloway in Bradford West in the 2015 General Election, resigned within days of her appointment over Twitter.
The former councillor in Tower Hamlets, east London, was selected at a meeting of the Bradford West Labour party in February 2015 but within 72 hours of her selection she stepped down. She was replaced by Naz Shah.