Former City minister Lord Myners has quit the board of the embattled Co-operative group amid a power struggle over his controversial plans to reform the business.
The company declined to comment on a report that he had left but it was understood that he had tendered his resignation as an independent director though he would carry on with his review.
The development came as turmoil over planned changes continued.
The Guardian said that Lord Myners' review is unlikely to be accepted by the regional boards and independent societies which run the organisation.
There had been more bloodletting earlier today as the Co-op's largest independent society was accused of making a “meaningless” political statement by voting against reform plans.
The board of the Midcounties Co-operative, which operates gas and electricity supplier Co-operative Energy as well as Co-op-branded food stores and other businesses, voted against proposals Lord Myners is devising.
They were accused of grandstanding by a source close to the Co-op while Lord Myners said the vote looked “premature” given that his report would not be complete until the end of this month.
Reform plans include a move to abolish the wider group's vast 21-member board, splitting it into two with a plc-style panel responsible for commercial decisions and representatives from its traditional membership sitting on a separate body.
The Co-op group board has already agreed to this proposal but the shake-up still needs to be finalised and agreed by its millions of members.
The Midcounties move was the latest blow to the wider group after chief executive Euan Sutherland walked out, claiming it was “ungovernable” - as he tried to push through reforms amid the worst crisis in the organisation's history.
The Co-op recently delayed the publication of annual results, which are widely expected to reveal losses of £2 billion.
Mr Sutherland quit last month, blaming “an individual, or individuals” at the top of the group for deliberately seeking to undermine him by revealing details of his £3.66 million pay deal to a Sunday newspaper.
In a Facebook post at the time, he said: “We appear to have disaffected people who are determined to make life difficult and embarrassing for the Co-operative at a time when what we need most are professionalism and loyalty to the business.”
Warwick-based Midcounties Co-operative, which has 9,000 employees, 439,000 members who share in its profits, and gross sales of more than £1 billion, is the largest independent co-operative in the UK.
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It says it is supportive of reform but is insisting that it is given a voice in discussions over the Co-op's future.
Its board voted against the Myners proposals on Monday night. They want more time to come up with a solution to protect the role of the members and the independent societies.
Midcounties president Patrick Gray told the Guardian: “If the group is simply presented with a menu that presents the Myners-proposed position, we will not support it.”
A spokesman said: “The Midcounties Co-operative supports the view that reform is needed and is committed to working towards that.
“The Co-operative Group is a democratic organisation and we want to ensure that the views of our members and colleagues are fully represented during these very important discussions surrounding the future of the group.”
But Lord Myners said: “The Myners Review will not be complete until the end of this month. In the meantime, we are meeting with the regional boards to explain the underlying thinking that will be detailed in our report.
“It would seem premature to vote until the report is complete. The review is independent. My role is akin to that of a doctor - to examine, diagnose and prescribe. It is up to the patient to decide whether to take the medicine.”
A source close to the Co-op played down the impact of the “meaningless” Midcounties move, saying it was just one of five societies controlling 25 per cent of votes at the meetings that will be held to ratify the reforms.
“It would appear that taking a vote on a report that is not yet complete is a political statement,” the source added.
Lord Myners has previously said the group must take urgent steps to reform a “massive failure” of governance or it will go bust.
In an interim review published last month, he criticised the lack of experience on its board and said he was “deeply troubled by the disdain and lack of respect for the executive team” among some members.
He acknowledged “acute concern” among Co-op board members and those in the regions over how reform could be achieved while preserving democracy, but said he was “confident that the two are fully compatible”.
Lord Myners was appointed to the board in December and tasked with the independent review after a disastrous year for the Co-op in which its banking arm needed to be rescued following the discovery of a £1.5 billion hole in its finances.
It is now facing a series of investigations into what went wrong, as well as continuing questions over the appointment of disgraced bank chairman Paul Flowers despite his lack of knowledge of the sector. He was later exposed in a newspaper drugs sting.
The Midcounties Co-operative added: “Our Board has unanimously agreed that if Lord Myners, as expected, presents proposals which fail to reflect representative democracy or the interests of the independent societies, then it will vote against them.”