Bethnal Green and Bow Labour Party, which was about to select from an all-women shortlist when an industrial tribunal ruled that the process was illegal, must now send all its applications to Walworth Road for approval.
Members in the area, where the sitting MP Peter Shore is retiring, expressed anger and disappointment at the move last night. There were rumours that the leadership wanted either to exclude one of the local front-runners or to include a candidate of its own choice.
Among Labour hopefuls still looking for a seat is Alan Howarth, the former Conservative minister who defected. However, party sources have denied that they would force the seat to take him.
At a meeting last week, officials from Labour London regional office told local members they would not be allowed to draw up their own shortlist from nominations, which is the normal practice.
Instead, more than 100 people who have expressed an interest in the seat will be asked to send in CVs, which will then be passed to the National Executive Committee. A One-Member-One-Vote ballot will then be held in the constituency based on the NEC's shortlist.
This is the third time that Bethnal Green and Bow Labour Party has tried to select a candidate to replace Mr Shore. The process was halted in November 1995 when an all-women shortlist was imposed and again in January 1996, when a tribunal ruled that such lists were illegal.
There had been rumours that the party leadership wanted to prevent the deputy leader of Tower Hamlets council, Rajan Jalal, from standing. Mr Jalal was once suspended from the party over allegations that he once accused a former council leader of inciting racial hatred - a charge which he denied.
Last night Mr Jalal said he still hoped to be on the shortlist for the seat and dismissed rumours about his chances as the work of opponents. "I am angry the selection has taken so long, and I am angry that people are only getting half of democracy. But in the end I am happy some sort of selection is happening and that the membership will have a vote," he said.
The constituency secretary, Julian Sharpe, said: "The feeling at the meeting was of disappointment and not a little anger. The reason they have given is that the election could be called at any time and they want a candidate in place by the end of February."
A Labour Party spokesman said Bethnal Green and Bow was one of six seats which had not yet selected a candidate.None of the others had been told it was to have a shortlist imposed on it, he said.