Ed Miliband is to end the system where individual trade unionists are automatically affiliated to the Labour Party
In the wake of the Falkirk ballot-rigging row, the Labour leader will use a speech later to set out what aides are calling the "biggest party reforms in a generation".
The changes are intended to strengthen the party's links with its individual members while diluting the influence of trade union bosses.
Labour sources insisted Mr Miliband had always intended to deliver party reform, although there was no attempt to deny the timing of the announcement was linked to events in Falkirk.
He will not set out a timetable for reform but instead is expected to announce the appointment of a "senior party figure" to work through the process of putting it into practice.
Labour sources said they did not believe that it would require a change in party rules, although they suggested they could "formalise" the new arrangements with a vote at party conference.
"We would like to work with the unions and local parties to bring it about. We want to do it in a co-operative way but there are other ways in which you can do it," one source said.
Under the proposals, the three million trade unionists currently affiliated to the party through the automatic payment of affiliation fees will in future decide as individuals whether they wish to do so.
In other measures, Mr Miliband will announce plans for Labour's next candidate for mayor of London to be picked through a system of US-style primaries - with the possibility they could be extended to the selection of parliamentary candidates where the local constituency party is weak.
There will also be spending caps in selection contests for Parliament and the European Parliament covering both would-be candidates and any organisation backing them.
Mr Miliband has been at loggerheads with the Unite union boss Len McLuskeyA new code of conduct will be drawn up for those seeking parliamentary selection, with the prospect of disqualification if they breach the rules.
Standard constituency agreements with the trade unions will be put in place to ensure no one involved in the selection process can be subjected to "undue local pressure".
In his address to the St Bride's Foundation in London, Mr Miliband will call for an end to "the politics of the machine" - typified by events in Falkirk where the Unite trade union is accused of trying to pack the constituency with its members to secure selection of its preferred parliamentary candidate.
"What we saw in Falkirk is part of the death-throes of old politics. It is a symbol of what is wrong with politics. I want to build a better Labour Party - and build a better politics for Britain," he is expected to say.
Officials acknowledged that ending automatic affiliation - which raises £8m a-year - would represent a financial "hit" for the party.
However, Mr Miliband will argue it will also provide the opportunity to get trade unionists to become active in the party, involving them directly in its campaigning.
"The problem is not that these ordinary working men and women dominate the Labour Party - the problem is that they are not members of local parties, they are not active in our campaigns," he is expected to say.
"Trade unions should have political funds for all kinds of campaigns and activities as they choose. But I do not want any individual to be paying money to the Labour Party in affiliation fees unless they have deliberately chosen to do so.
"So we need to set a new direction in our relationship with trade union members in which they choose to join Labour through the affiliation fee.
"I believe this idea has huge potential for our party and our politics. It could grow our membership from 200,000 to a far higher number, genuinely rooting us in the life of more people of our country."
Unite general secretary Len McCluskey indicated the union would oppose moves to end automatic affiliation.
Writing in The Guardian he said: "Switching to an 'opt-in' for the political levy wouldn't work - it would require Labour to unite with the Tories to change the law, would debilitate unions' ability to speak for our members and would further undermine unions' status as voluntary, and self-governing,organisations."
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