The party will publish a survey alleging that the Welsh valleys initiative by the former Secretary of State for Wales failed to solve the underlying problems caused by earlier pit closures.
Labour leaders believe that should be seen as a warning for the mining communities in England and Wales which will be faced with mass unemployment if the pits are allowed to close.
Lord Walker was given the task of bringing industry back into the coalfields by John Major and Michael Heseltine, President of the Board of Trade, who were impressed with his success in achieving inward investment in Wales.
The report produced by Ron Davies, shadow Secretary of State for Wales, attacks the valleys initiative for painting 'a superficial gloss' over the deep-seated problems in the steel and coal communities, which undermined the local authorities as key agents of the regeneration process.
A group of 12 Welsh Labour MPs will support his call for a strategy to enable the valley communities to regain their self-confidence. Its report says traditional male employment in heavy industries has been replaced by light manufacturing industries, employing mainly women in part- time and poorly-paid jobs, leaving high rates of male unemployment with a growth in unskilled or semi- skilled work.
The MPs will call for construction schemes, including housing, to provide jobs; more investment in health care and education; and a co-ordinated industrial policy to increase foreign investment.
The Cabinet is deeply divided about whether the Treasury or the electricity industry should be required to subsidise additional coal stocks to rescue some of the pits.
Mr Heseltine has hinted that legislation may have to be introduced as part of the rescue package to force National Power to stockpile an extra 15 million tons of coal at its expense. Some ministers believe Mr Heseltine should be forced to use a subsidy from the taxpayer, through the Treasury. With John Major visiting Washington next week, a Cabinet decision has been put off until early next month.
But some Tory MPs with seats in the South are warning ministers to give equal treatment to the unemployment in their areas as the coalfields. Peter Bottomley, a former minister and Tory MP for Eltham in south London, was given government figures showing that since the 1987 general election, unemployment in the mining areas in England had fallen by 13.6 per cent, in Wales by 17.6 per cent, and in Scotland by 25.4 per cent.
Unemployment fell by 10 per cent in Mansfield in the Nottinghamshire coalfield, where 1,686 jobs were lost through colliery closures and unemployment fell by 34 per cent in Easington where 1,487 colliery jobs where lost.