Tom Burlison, Labour Party treasurer, forecast defeat for Mr Smith's version of one member, one vote (Omov) as conferences of three of the biggest unions voted overwhelmingly to oppose it.
Decisions to fight Mr Smith were taken by the GMB general union, the National Union of Public Employees and the National Communications Union, which command a quarter of the block vote at the party's autumn policy-making conference.
Yesterday's decisions mean that during the union conference season nearly 50 per cent of Labour votes have been mandated against Mr Smith. The transport workers union, which accounts for over 1 million conference votes, is also certain to line up against the party leadership.
Mr Burlison, who is also deputy general secretary of the GMB, urged the Labour leader to compromise. 'If the brakes are not applied there can only be one outcome. The trade unions will retain their involvement in the Labour Party,' he told his annual congress in Portsmouth.
The row over party democracy had pushed Labour to 'the brink of a crisis' which was a 'self-induced home grown disaster'. He fuelled the conflict by accusing senior party figures of 'arrogance and inflexibility' in the debate over Omov - thought to be a reference to the Shadow Cabinet members Gordon Brown and Tony Blair.
The party treasurer added that the row was 'keeping the Labour leader awake at night', diverting attention from the Government's incompetence and overshadowing all the union conferences.
In a speech greeted with a standing ovation, John Edmonds, general secretary of the GMB and the man responsible for publicising the disagreements, said that the party must enfranchise the 4 million trade unionists who pay the political levy, the biggest proportion of which goes to the party. The 200,000 predominantly middle class Labour members were insufficient to ensure a broad and representative democracy.
The GMB opposes Mr Smith's plan to call on levy payers to pay a small extra amount to become party members. The GMB leader delivered what he described as a comradely warning to the party: 'Financially and organisationally the Labour Party is in something of a mess.'
Unless they were careful, supporters of Omov would 'create a narrow and exclusive party limited to those lucky people who can stump up an pounds 18 membership fee without thinking too hard'.
However, sources close to Mr Smith said that by their rigid stance Mr Edmonds and the GMB had 'painted themselves into a corner'. But other unions, such as Nupe with its half-way house registered supporters' scheme, were viewed as having left the door open to a more flexible, compromising approach as the summer wears on.
Mr Smith's camp insisted that the Labour leader remained unbowed by events. His tactic appears to be that once the dust from the union conferences has settled, compromises can be extracted from the union side as the autumn party conference looms.
Mr Edmonds was also roundly condemned by Neil Kinnock, the former leader, who said in a BBC radio World at One interview that defeat would cause a major problem for the party.
Mr Kinnock said what had made him 'somewhat less than amused' over the past few days were 'the protestations of continuing undying support and admiration for the new leader of the Labour Party coupled with actions which can do nothing other than put him under pressure'.
Tom Sawyer, deputy general secretary of Nupe, and a senior political 'fixer' in the party, speaking to his union's conference in Scarborough, said Nupe was opposed to Omov, but was also against the block vote.
The conference called instead for a register of Labour supporters as the best way of maintaining union involvement in the selection of parliamentary candidates which could also be used in leadership elections.
Mr Sawyer said: 'The register is not one-member, one-vote and it is not the block vote. It is in the middle and provides a bridge. The register will be exactly like a supporters' club. It might just form a bridge between those who want one-member, one- vote and those want to keep the link.'
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