Critical psychology is both a critique of "mainstream" psychology and an attempt to apply psychology in more progressive ways (based, for example, on Marxist or feminist analyses) and contexts than have thusfar been the case. There are a number of textbooks of critical psychology and at least two critical psychology institutes - in Manchester and Sydney. Compare critical theory.
It was founded in the 1970s in Berlin at the Freie Universität Berlin, the German branch of critical psychology predates and has developed largely separately from the rest of the field. Critical psychology is not really an division of psychology; it follows its own methodology. It tries to reformulate traditional psychology on an unorthodox Marxistic base. The appeal of critical psychology to socialists is that it is an attempt to come to grips with the social and the historical "conditionality" of human beings. One of the most important books in the field is the Grundlegung der Psychologie (Foundations of Psychology) by Klaus Holzkamp (Frankfurt a. M. 1983), who might be considered the theoretical head of critical psychology.
A couple of years ago the department of critical psychology at the FU-Berlin was closed and was added to the traditional psychology department. Nevertheless, this approach of psychology is still alive.
Like many critical applications, critical psychology has expanded beyond Marxist roots to benefit from other critical approaches. Consider ecopsychology and transpersonal psychology.