Major Ukip donor Arron Banks has threatened to pull his funding unless he is made chairman so he can "purge" members and stop it being "run like a jumble sale".
Following party leader Paul Nuttall's defeat to Labour in the Stoke-on-Trent Central by-election, Mr Banks blamed "dullards" like Ukip's only MP Douglas Carswell for not bringing in enough Tory votes.
He said the defeat was the "final straw" in terms of Mr Carswell, accusing him of being preoccupied with "sabotaging" a knighthood for former leader Nigel Farage, an allegation strongly denied by the MP.
Mr Banks said Mr Farage, who criticised Mr Nuttall for not being radical enough on immigration, would have a "more fulsome role" in the party under his stewardship.
Mr Banks told The Sunday Express: "I am giving Paul Nuttall an ultimatum that either I become chairman and sort out Ukip by bringing in business people and professionals to make the party electable, or I am out of there.
"The party cannot continue to be run like a jumble sale.
"If Nuttall doesn't professionalise it and toss out the likes of Douglas Carswell, Suzanne Evans and the rest of the Tory cabal then the party is finished anyway.
"These dullards aren't bringing in Tory votes, Stoke proved that, so what are they for? The party now needs to bring in serious people to fix its ramshackle administration, stay relevant, and stay radical or it will die.
"From what I hear far from winning elections, Carswell's main concern is sabotaging Nigel's knighthood, which is why he must leave the party."
Mr Banks, who recently launched the brash right-wing website Westmonster, said he is going to make a formal complaint about Mr Carswell to Ukip's national executive committee for bringing the party into "disrepute".
"Mr Carswell is a career politician and doesn't care about Ukip and he has got to get out," the businessman said.
"So my first job as chairman would be to purge the party of these sorts of people.
"Carswell is welcome to go back to the Tories or stand as an independent but he will not be welcome under the Ukip banner.
"He has always been a green-eyed jealous monster when it comes to Nigel."
Mr Banks added: "The vast majority of Ukip people are lovely people but there is an element that causes trouble and if I was in charge I would want to eliminate all of that."
Ukip had seen Stoke, which voted overwhelmingly for Brexit in last year's referendum, as fertile ground for a challenge to Labour in a contest triggered by the resignation of former shadow education secretary Tristram Hunt.
However, Mr Nuttall's gamble of standing himself failed to come off as Labour's Gareth Snell held the seat with a majority of 2,620, raising questions as to whether Ukip could take seats from Labour in its traditional heartlands.
In response, Mr Farage appeared to suggest Ukip should adopt Donald Trump-style immigration policies to "own" the issue in the eyes of the electorate.
He said on Friday: "Should we have strong vetting, should we make sure that we're a place that illegal immigrants can't come, should we have a proper, balanced, system where we take good people in from around the world?
"Absolutely, that's exactly what we should be doing and I think maybe Ukip has slightly lost ownership of this argument."