Kim Leadbeater a campaigner who lives locally and is an ambassador for the Jo Cox Foundation, said in a statement that she would be "honoured" to "give the people of Batley & Spen the opportunity to put their trust in me" in the election expected to take place this summer.
The by-election was called after Tracy Brabin, the local MP, was elected as the first mayor of West Yorkshire on Sunday and Labour is defending a slender majority of 3,525 votes in a seat it has held since 1997.
Losing the seat to the Conservatives would pile further pressure on Labour leader Sir Keir Starmer after the disastrous Hartlepool by-election result and a poor showing in last week's local elections.
Ms Leadbeater told the Batley and Birstall News that the prospect of the forthcoming by-election for Batley and Spen "has affected me deeply in ways I really hadn’t expected". She added: "I’ve had to do a lot of soul-searching and thinking about what’s best for the place I love.
"I’ve been moved by how many local people from across the area, many Labour Party members but others too, have been in touch asking me if I would stand in the by-election. It has knocked me for six.
"I would love to represent this extraordinary, vibrant place that I have called home all my life. I am touched that so many people seem to think I would do a good job and I can promise that if they want me I will give my all for Batley and Spen at Westminster.
"The truth is, I have never really seen myself as a political animal, but I care deeply about the area where I was born and have always lived, and where the people are second to none.
"Through all the work I have done with Jo’s foundation over the past five years I have met so many truly fantastic people from across this area, some of them Labour, many not involved in party politics at all. This community picked me up when I needed it most and I will be forever grateful.
"Everyone knows I talk a lot, but I also listen a lot. And I’ve listened to hundreds of people over these last few years. I’ve heard how disillusioned and disengaged they are with politics and how worried they are about the future of our towns and villages.
"And I’ve listened to their ideas about how we can give Batley and Spen an even brighter future. I won’t pretend to have all the answers, but I will speak up wherever and whenever it takes, so the voice of this constituency is heard loud and clear.
"Strengthening the community that I love and taking it forward will be a team effort but I’m ready to take a lead in that. I’ll be talking a lot to Labour members in the next little while - but mainly, once again, listening to what they have to say.
"And if they put their confidence in me to be their candidate then I would be honoured to represent them and give the people of Batley & Spen the opportunity to put their trust in me."
Ms Leadbeater, 45, revealed in 2017 that "eminent politicians" had tried to persuade her to stand to replace her sister as Batley & Spen following her murder the previous June.
She told The Yorkshire Post at the time: "In the weeks after Jo was killed, what was hard for me was that I had people, eminent politicians, saying it would be great if I wanted to be the next MP and it was something I should consider.
"It wasn't my world, it was Jo's world, I am not a political animal, I supported Jo because she was my sister and I think people locally found this quite hard to understand.
"Jo wasn't my MP, she was my sister, but because people locally knew Jo through the Labour party, it was like 'it must be really hard for you, who is going to get the job'.
"It makes no difference to me who gets that job, because Jo is my sister, as long as it is a good person doing that job, that's fine. I didn't engage with the previous MP, and I didn't want anything to do with politics going forward, it was Jo that got me into that.
"And that was just Jo doing what Jo did, which was try to help people. But you do doubt yourself and think 'maybe I should be the next MP, maybe that is the answer'.
"Thank God you don't make decisions when you are so emotionally vulnerable and raw. Because I could have agreed to do anything. Thank God you have got the sensibility to think 'I will just sleep on that'.
"I might have got it, and that would have been ridiculous because we had the trial to get through, we had our first Christmas to get through, we had so much to get through."
Ms Leadbeater, who chairs the More in Common Batley and Spen community volunteer group, was awarded an MBE in the new year honours in December for her work tackling social isolation during the Covid-19 pandemic.
Other people reported to be standing are Paula Sherriff, the former Labour MP for neighbouring Dewsbury who lost her seat in 2019 and Dan Howard, a Labour party press officer.
According to the Guardian Lisa Johnson, the GMB union’s external relations director, who is seen as a key Labour power player, had been tipped for the candidacy but said she was not interested. Salma Arif, a Leeds council cabinet member, has been mooted, as has Habiban Zaman, a Batley East councillor, the paper reported.
The Yorkshire Post understands that a number of people have expressed an interest in being the Conservative candidate but none have yet made their interest public.
And Paul Halloran, who stood for the Heavy Woollen District Independents in the 2019 General Election, also appears keen to stand.
Mr Halloran, who received 6,432 votes in 2019, nearly double Ms Brabin's majority, wrote on Facebook: "The electorate of this proud area want a person who is relatable, lives & breathes the area & who cares passionately. That person is me."