Labour has been warned it looks like a "disunited" party because of the row over its links with unions.
Dave Prentis, general secretary of Unison, warned that people would not vote for a party which was "squabbling".
He revealed that the number of members Unison affiliates to Labour, in a system similar to the one championed by Miliband, is set to fall from half a million to 430,000, costing Labour £210,000.
He told a press conference in Bournemouth: "We look like a disunited party. Where I grew up, in Leeds, we were told never to wash your dirty linen in public."
Prentis said Labour had lost the election in Australia because of internal squabbles, adding: "It will happen to the Labour Party in this country if it does not get its act together."
Prentis said any malaise in British politics could be blamed on politicians following controversy over issues such as MPs expenses and the Iraq war.
The GMB has decided to reduce its funds by over £1 million after leader Ed Miliband said he wanted to change the way union members are affiliated.
Under his plans, union members would have to opt in rather than being automatically affiliated to Labour.
Other unions, including Labour's biggest affiliate, Unite, have held back from following suit, offering a breathing space to Miliband, who makes a crucial speech to the TUC Congress in Bournemouth on Tuesday.
Len McCluskey, leader of Unite, said Miliband had a challenge ahead of him to convince working people that Labour still had their interests at heart.
He rubbished suggestions that Unite had influenced the outcome of an internal investigation by Labour into claims the union rigged the selection of a party candidate in Falkirk.
McCluskey said Unite wanted to move on from the controversy and concentrate on policies.
A senior Labour source said no-one should be claiming vindication from the Falkirk episode, adding: "The Unite-backed candidate in Falkirk has stood down. The Union Join scheme has ended. We now need to move on and press ahead with reforms to mend the link between Labour and the unions so it is fit for the 21st century."
The head of the TUC urged Labour and the unions to "shake hands and move on" from their row over affiliation.
General secretary Frances O'Grady said both sides should concentrate on issues such as low pay, zero hours contracts and jobs.
Ms O'Grady said she did not believe anyone wanted to break the historic link, which has come under strain over the bitter row over the selection of a Labour candidate in Falkirk.
She told a press conference: "I don't think anyone wants to get rid of the link, but we should expect it to evolve and change.
"Most people are worried about big business and wealthy individuals having too much power in politics and influence over policy.
"They want to see more nurses and car workers in Parliament, and Westminster to get to grips with living standards.
"My advice would be - shake hands and move on and start talking about the issues that people are worried about such as poverty pay, zero hours and jobs."
Billy Hayes, leader of the Communication Workers Union, said Miliband's reforms were "ill thought out."
He told a news conference in Bournemouth that his main worry was the prospect of moving to state funding of political parties, which he believed would be unpopular with the public.
The union reviews its funding for Labour every year, but was not about to follow the GMB in cutting its affiliation.
Hayes said he believed the number of CWU members affiliating to Labour would be "considerably less" under Miliband's reforms.
The Labour leader will tell the TUC on Tuesday that he is "determined" to make the change happen.
Miliband is resisting calls for him to apologise to would-be Falkirk MP Karie Murphy who has been reinstated to the party after the internal investigation cleared both her and Unite of wrongdoing.
The Labour leader is also fighting fresh Tory claims that the unions are "pulling the strings" of his party after a disciplinary process found no rules had been breached in the constituency.
Miliband is to tell the conference: "We need to build a party truly rooted in the lives of all the working people of Britain once more.
"That is what my reforms are about. It is the right thing to do. We have to change."