Ed Miliband faces a major attack on his leadership as trade unions call on Labour's grassroots to reject public sector pay restraint.
The Labour leader is on a collision course with union bosses after backing the government's salary freeze and arguing that protecting jobs was a higher priority.
The row will flare on the conference floor today when a union motion urges the party to condemn the policy, warning it amounts to a real-terms cut for workers and will fuel economic stagnation.
Despite earning the nickname "red Ed" for his union links, the opening of Labour's annual conference has been dominated by clashes with union bosses.
Mr Miliband told Len McCluskey, general secretary of Unite, he is "wrong" on pay restraint, insisting jobs must be top priority.
GMB leader Paul Kenny chose to aim his fire at Ed Balls, drawing up a dossier of "Balls Ups" he said were made when the shadow chancellor was in government.
Mr Kenny said of Mr Balls: "He would give an aspirin a headache, wouldn't he?"
Meanwhile, Lord Prescott told union leaders to "grow up" after Mr McCluskey said it was time to "kick the New Labour cuckoos out of our nest".
The internal wrangling comes at a time when the party is attempting to turn its fire on the coalition and present Ed Miliband as a credible future prime minister.
Mr Kenny said of Mr Balls: "He would give an aspirin a headache, wouldn't he?"
Mr McCluskey warned that Labour will lose the next election if it does not connect with workers, saying that the public sector pay freeze was also starting to have an impact on workers in private firms.
But Mr Miliband sought to use the row to show that the movement was not "pulling our strings". Asked about the pay row he told the BBC: "He is entitled to his view but he is wrong.
"We've got the right policy to say we put jobs in the public sector ahead of pay rises. That's what we said we would do this parliament. It is a difficult decision but it is the way to keep jobs in the public sector."
Shadow chancellor Ed Balls will call for cash raised by selling off 4G mobile phone licences to be used to "kick-start the economy" by building 100,000 affordable homes and a tax break for first-time buyers.
He will also tell delegates: "The longer this government staggers on with a failing economic plan, the worse it will get and the harder the job will be.
"Hard times will last longer than all of us hoped. And we cannot promise to put everything right straight away.
"And because we all know there can be no post-election spending spree, in our first year in government we will hold a zero-based spending review that will look at every pound spent by government.
"Carefully looking at what the government can and cannot afford, rooting out waste and boosting productivity."
Mr Balls has been the target of union attacks for sticking by his support for the current freeze on the pay of millions of public sector workers - a stance which saw him heckled at the recent TUC Congress.
Mr Kenny plans to read out the string of mistakes he believes Mr Balls made in government, including the controversial Private Finance Initiative, at a fringe meeting today.
He will say that Labour will have to go into the next election with a leadership the public can connect with, not those "damaged or dented by past mistakes which have not been owned up to".
Mr Miliband promised that Mr Balls would be "iron" in his resistance to irresponsible spending commitments.
"There will be tough decisions that we'll have to make as a government," he said.
Under him, a Labour government would be "different from the last and previous Labour government" because "we are not going to have lots of money to spend".
There would be "tough settlements right across our public services", he warned.
The Opposition leader said: "What we are going to see from the Labour Party this week, talking about how we can change the way the energy companies work, how we can change the pension system so people get a fairer deal, how we can change the banks ... that is all about how in tough fiscal times, when there isn't money around, Labour can make a difference.
"We are not going to spend money that we don't have, of course we're not. One of the things about Ed is that he is going to be iron in saying you cannot make commitments, both he and I are absolutely clear about this, you cannot make commitments unless we have an absolutely clear idea where the money is coming from."
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