For the first time in years, the party's national executive voted unanimously on an issue of substance in deciding that rule changes will go to this year's conference which will cut the trade union share from 90 to 70 per cent of the conference vote.
That means that next year, when Mr Smith wants the substantive changes in Labour's relations with the unions to be decided, the constituencies, representing ordinary members, will have 30 rather than 10 per cent of the votes.
The NEC also agreed that the Plant working group should produce, for next year's conference, firm recommendations on whether Labour should back electoral reform - ditching first-past- the-post elections for a more proportional system.
The unanimous decision to back the cut in the trade union vote - now in effect guaranteed passage at October's conference - came despite reservations from some that the issue should have gone into the wholesale review of Labour's relations with the unions that is now under way .
John Prescott said: 'I rather take the view that this should be done overall in a comprehensive review.' Tom Sawyer, deputy general secretary of the public employees union Nupe, said he would have liked the issue 'wrapped up together' with the other changes. He added, however, that 'the unions are unanimous in wanting to change the balance of power, and this is only a first step' - a view echoed by Tom Burlison from the GMB general union.
The party conference had backed the cut in the block vote in principle two years ago, and Mr Sawyer said yesterday's move showed Labour was acting in good faith and standing by its previous decision.
The battle lines over the block vote now look to be drawn over whether it should finally fall below 50 per cent of conference votes, over whether it should be split so that union delegates vote as individuals rather than in a block, and over precisely how unions should be represented.
Gavin Laird, general secretary of the Amalgamated Engineering and Electrical Union, said: 'We hope this move will be the first step towards the complete abolition of the block vote.'
Margaret Beckett, the party's deputy leader, said yesterday's decision 'does not pre-empt any wider or further reforms to modernise the relationship between the party and the unions'.
From next year, votes are likely to be cast in percentages of the conference to weaken the image of trade union leaders waving cards each worth hundreds of thousands of votes.
The NEC also backed, by 21 votes to 4, a rise from pounds 15 to pounds 18 in membership fees.
John Smith's pledge to give women a higher profile in the presentation of Labour policies will be tested when he forms his Shadow Cabinet team this week.
On Saturday, Mr Smith said the party had to exploit the talents of 'the many able women who now represent Labour in Parliament'. Labour's women MPs are urging Mr Smith to give women Shadow Cabinet members front-line departmental jobs.
Dawn Primarolo, MP for Bristol South and chair of Labour's women's parliamentary committee, said yesterday: 'Despite the fact that we have more women MPs than the Conservatives, there is an illusion that they have more women because they are given high-profile posts.'Reuse content