The news is the latest in a series of embarrassments for Tony Blair generated by a left-wing grouping of Labour MEPS.
David Taylor, principal speaker for the Green Party, said there had been talks with one Labour MEP about forging the new alliance ahead of the 1999 Euro-election. Last night the Greens, who were holding their annual conference, refused to name the MEP with whom they had spoken, but Mr Taylor said: "We have met with a Labour MEP to discuss the possibility of a rainbow list which would include rebel Labour MEPs, greens and possibly other groups.
"He told us there were a group of six interested in working with the Green Party out of a group of 15 disaffected with Tony Blair's leadership."
The Greens' party executive was, he added, anxious not to dilute its message and was wary of rainbow alliances. But no decision would be taken until details of the new system proposed for the Euro-election have become clearer.
Some MEPs have been alarmed by the Government's promise to legislate for a more proportionate type of electoral system in time for the 1999 election. Rebel MEPs fear a regional list system would give party bosses new power to block left-wingers from gaining seats.
The new system raises the possibility that smaller parties could win seats for the first time.
A Labour Party spokeswoman said last night: "If there is any truth in the assertion that Labour MEPs are, in any way, in discussion with another political party with a view to joining them then that is a matter which would immediately be investigated. Any suggestion that some MEPs are thinking of joining another political party because they might not be selected or elected under the new electoral system will meet with nothing short of derision from their colleagues."