Lisa Nandy said a future Labor government would reduce the number of foreign countries receiving development aid and argued money should go to the poorest states rather than middle-income states.

The shadow secretary for international development told an NGO conference at the Overseas Development Institute (ODI) this week that the focus of aid should shift and Labor would take a “more strategic approach based on the UK’s unique strengths”.

Nandy, who has been consulting with a number of former development aid ministers, said the current minister, Andrew Mitchell, told her that when Labor left office in 2010, UK aid would be sent to 33 countries.

“We’re now working at 88 on a fraction of the budget,” she said. Nandy stressed that a Labor government would “never pull the rug out from under the hands of a country that relies on us”.

However, she said: “But this is not 1997. Our economy is less than twice the size of China, and the world’s debt is no longer primarily owed to countries like ours.”

Nandy’s comments come amid ongoing debate within her party over how to handle foreign aid.

While some hoped Labor would quickly return to spending 0.7 per cent of GDP on aid, she reiterated that a Labor government would only return to targets abandoned during Prime Minister Boris Johnson’s tenure “if circumstances warrant”. Shadow chancellor Rachel Reeves is understood to be involved in discussions to get “value for money” from the UK’s aid spending.

“But the task now is to ensure that our development budgets are spent on development and not constantly bombarded by mismanaged departments in Whitehall,” Nandy said, referring to the Home Office’s use of refugees and asylum seekers in the UK.

“The price/performance ratio is poor. It is draining much-needed resources and damaging our reputation as a long-term, reliable partner in every corner of the world.”

Nandy said Labor was looking into whether the UK government could provide guarantees to developing countries at risk of unmanageable debt burdens and supported the push for an international definition of unsustainable debt.

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“The UK is home to the City of London and is the legal jurisdiction where many of these debts are being resolved. These countries need us and we have a responsibility to help them,” Nandy said.

Labor is likely to face particular pressure from NGOs such as Save the Children and Oxfam to restore the aid budget to 0.7% of national income. Last year, some charities described UK aid cuts as a “death sentence” for children in the world’s most dangerous areas.