This question has been answered in Stackoverflow: https://stackoverflow.com/questions/77973282/biopython-phylo-collapsing-nodes-on-tree-if-node-in-list-and-rename-the-respect.

Code shared by Umar:

from Bio import Phylo
import io

# Input tree and table
tree_structure = "((((A:0.1, B:0.2):0.3, C:0.3):0.15, (D:0.3, (E:0.1, (F:0.15, (G:0.1, H:0.1):0.1):0.1):0.1):0.1):0.15, I:0.2);"
rename_table = {"A, B": "X", "F, G, H": "Y"}

# Read the tree
tree = Phylo.read(io.StringIO(tree_structure), 'newick')

# Function to collapse and rename nodes
def collapse_and_rename(tree, rename_table):
    for nodes, new_name in rename_table.items():
        common_ancestor_names = [node.strip() for node in nodes.split(',')]
        common_ancestor = tree.common_ancestor(common_ancestor_names)

        # Calculate the total branch length of the collapsed node
        total_branch_length = sum(child.branch_length for child in common_ancestor.clades if child.branch_length is not None)

        # Set the new name for the common ancestor node
        common_ancestor.name = new_name

        # Adjust branch lengths of children
        for child in common_ancestor.clades:
            if child.branch_length:
                child.branch_length -= total_branch_length
        # Set the branch length of the collapsed node to the sum of its children's branch lengths
        common_ancestor.branch_length = total_branch_length



# Collapse and rename nodes
collapse_and_rename(tree, rename_table)

# Function to collapse nodes and update branch lengths
def collapse_nodes(tree, nodes_to_collapse):
    for node in tree.find_elements(target=lambda x: x.name in nodes_to_collapse, order="postorder"):
        tree.collapse(node)
nodes_to_collapse = ["A", "B", "F", "G", "H"]
# Collapse nodes and update branch lengths
collapse_nodes(tree, nodes_to_collapse)

# Draw the tree
Phylo.draw(tree)