Miliband takes on the unions with plan to dilute their influence

Members of the public will be given a formal role in the choice of Labour's policies, candidates and future leaders under far-reaching reforms to be unveiled today.

Ed Miliband will offer ordinary people the chance to become "registered supporters" free of charge without paying Labour's £41-a-year subscription fee. He will also invite pressure groups such as "green" bodies and non-governmental organisations to become "registered bodies".

The aim of the "Refounding Labour" project is to combat the decline in membership, which has afflicted all political parties, and to transform Labour into an outward-looking party for the internet age.

Labour sources deny that the real goal is to dilute the influence of the trade unions, who have half the votes at the party's annual conference and a third of the votes in the electoral college which chooses the Labour leader. However, that could be one side-effect of the drive to broaden Labour's base, since some of the voting power enjoyed by ordinary members and unions could be reduced to hand a share to the new registered supporters and bodies.

Labour's open-minded approach to internal reform will be stressed in a document to be published today by Peter Hain, the shadow Welsh Secretary, who is in charge of the wide-ranging review. Some insiders say the result could prove to be even more radical than Tony Blair's landmark decision to scrap Clause IV, Labour's long-standing commitment to public ownership.

A ground-breaking exercise will see Labour using text messages, email, Facebook, Twitter and other social media to allow people to join an interactive debate on the party's future structure, rather than send in one formal submission.

"If people do not join parties in the way they used to, we have to find new ways to reach them," one senior Labour source told The Independent. "Ed wants to refound Labour for a new generation and leapfrog the other parties. We have lost members hand over fist and politics is changing beneath our feet."

Labour's membership slumped from 405,000 in 1997 to around 150,000 earlier this year, but has since bucked the recent trend by attracting 50,000 new recruits. Labour's national executive will draw up specific reform plans in June and they will be decided at the party's annual conference in September. Mr Miliband regards the exercise as an important part of his drive to position his party as representing mainstream Britain.

Today, the Labour leader will join Liberal Democrats Baroness Williams, Charles Kennedy and Tim Farron, and Green Party leader Caroline Lucas at the first cross-party rally in support of a Yes vote in the 5 May referendum on whether to switch from the first-past-the-post system to the alternative vote. He will hint at co-operation and possible coalition with the Liberal Democrats after the next general election.

Mr Miliband will say: "This Tory-led government and its alliance of power with the Liberal Democrats does not change my belief that there is a progressive majority in this country. Britain deserves an electoral system that fairly reflects voters' views. I will be campaigning for a majority Labour government at the next election, whatever voting system we have. If there is a Conservative majority, they deserve the same right. But rule without a mandate, simply because the majority is divided, is unfair on voters."

He will argue that the "tragedy for progressive politics" in Britain is that division on the centre and left has handed a united right victory after victory.

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