Delegates overwhelmingly backed proposals which would make local government more "powerful and responsive" through electoral reform.
The party leadership hopes a deal can be struck with Downing Street to deliver PR for local authorities as a "gesture of goodwill" at a time when activists are increasingly sceptical of closer co-operation.
Tony Blair believes that an extension of PR to town hall elections would end the "one-party" states in some Labour strongholds which have sparked allegations of mismanagement and corruption.
However, Mr Prescott is said to be ready to snub Liberal Democrats over the plans because he is concerned they could lead to the introduction of PR in Westminster.
But delegates are infuriated by the Deputy Prime Minister's reluctance and want the proposal included in the next Labour manifesto.
Delegates also overwhelmingly backed a motion attacking Mr Prescott's failure to deliver on transport. Matthew Taylor, the party's environment spokesman, also proposed plans for free off-peak travel for pensioners and the socially excluded.Reuse content