Ed Miliband has vowed to "let people back into our politics" as he unveiled details of what he branded Labour's biggest ever reform.
The Labour leader revealed details of his promised plan to recast the party's historic link with the trade unions, saying the proposals represented the biggest changes to who could become involved in the party since its formation.
Under the plan, the electoral college system for leadership elections - which gives a third of the votes each to the unions, rank and file party members, and the MPs and MEPs - will be scrapped for a system of one member, one vote.
Individual trade unionists no longer be automatically affiliated through the payment of the political levy, but they will be able to take part in elections if they choose to join a new category of affiliated members for a fee of just £3.
They will also be able to attend party meetings and the leadership hopes they will be encouraged to become more involved in campaigning, providing a new source of activism.
It will end the system which brought Mr Miliband the leadership with the support of the big unions, narrowly beating his older brother David.
"These are the biggest changes to who can become involved in the Labour Party since probably its formation," Mr Miliband said.
"They go much further than people expected, but they are designed to open us up and complete unfinished business of the past 20 years. These reforms are about letting people back into our politics, and getting them back into politics."
Details of the plan are being sent to members of the party's ruling national executive ahead of a special conference in London on March 1, when it will be decided whether they should be adopted.
The reforms were drawn up following the controversy last year over the selection of a Labour candidate in Falkirk, where the Unite union was accused of signing up members in the constituency in order to influence the outcome.
Mr Miliband said that the changes would be phased-in over a five year period amid warnings that the party could suffer a catastrophic fall-off in annual funding from the unions.
"I know there is a risk and it is right to phase this in because this is a massive change. I make no apology for making sure the party is financially secure, so these reforms are being phased over a five-year time scale."
The unions will retain their collective voice at party conference, with 50% of the vote, as well as their current quota of seats on the national executive.
However Mr Miliband said he would look at the structure of conference in the future.
"I know many people wished I had not embarked on these reforms, but our local parties can come to reflect every diverse walk of life in our their communities. That will be a great advance," he said.
Under the changes, MPs will retain the sole right to nominate candidates for the leadership - although the level of support candidates will need to get on the ballot paper will be raised - possibly to 20% of Labour's MPs.
They were criticised by veteran backbencher Ian Davidson (Glasgow South West) who said the leadership was determined to break the link with the unions in order to strengthen its control over the party.
"What we've got here is part of the Blairite agenda, a hangover from New Labour, that wants to marginalise and diminish the role of the trade unions," he told the BBC Radio 4 Today programme.
"New Labour have always wanted that because they have always wanted to remove any alternative centre of power. It is going to be a one-way transmission where the line comes down from the centre to individual members."