Miliband urges 'historic' changes to Labour's union links
Ed Miliband has pledged to end the automatic "affiliation" fee paid by three million union members to Labour.
It comes after the Unite union was accused of trying to rig the selection of the party's parliamentary candidate for Falkirk.
The Labour leader said changing its link with the unions would mean an end to "machine politics".
But Unite general secretary Len McCluskey said the fee - worth £8m a year to Labour - would "stay as it is".
The GMB union said there was no evidence Mr Miliband's plans were "workable" and warned that they would cost the party a "very significant" amount.
Under the current system, members of supportive unions pay an automatic levy to Labour, unless they choose to opt out. Labour insiders estimate making it non-automatic would cost the party about £5m.
In his speech in London, Mr Miliband proposed that only those union members who "deliberately" chose to join the party in future would do so.
The announcement came after Unite, one of the party's biggest donors, was accused of signing up its members to Labour in Falkirk - some without their knowledge - in an effort to get its preferred candidate selected.
Mr Miliband promised to make politics more "open, transparent and trusted" by creating a "modern" relationship with trade unions, saying he wanted "to take action and seize the moment that Falkirk represents".
The changes would be introduced as "soon as possible" and definitely before the next general election, Mr Miliband said. An aide later said this should happen "within months, rather than years".
But Mr McCluskey told BBC Radio 4's World at One there was "no civil war" within the Labour movement.
He added that, in his speech, Mr Miliband "did not mention anything" about losing the political levy from unions, which "would stay as it is".
Instead, Mr McCluskey argued, the Labour leader wanted to add a "second option", allowing union members to become an associate member of Labour - allowing them to show a stronger commitment to the party.
GMB general secretary Paul Kenny said Mr Miliband's proposal would reduce Labour's funding "by a very significant but as yet unquantified amount".
He also said: "The announcement contains a large number of new Labour Party policies which as yet are completely without the necessary substance that is required to see if they are workable."
In his speech, Mr Miliband said: "What we saw in Falkirk is part of the death throes of the 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.
"There is no place in our party for bad practice, wherever it comes from. I am determined to uphold the integrity of this party."
Mr Miliband said unions should have political funds "for all kinds of campaigns and activities as they choose" but individual members should not pay Labour any fees "unless they have deliberately chosen to do so".
He added: "We need to do more, not less, to mobilise individual trade union members to be part of our party... The problem is not that these ordinary working men and women dominate the Labour Party. The problem is that they are not properly part of all that we do.
"They are not members of local parties; they are not active in our campaigns. I believe we need people to be able to make a more active, individual, choice on whether they affiliate to the Labour Party."
Mr Miliband said former Labour Party general secretary Ray Collins who, as a TGWU official, helped steer the merger with Amicus to create the Unite union, will lead discussions with the trade unions on the plan.
The Labour leader said the changes would have "massive financial implications" for the party, but could raise the current membership from the current 200,000 to a "far higher number".
He also promised to look at holding open "primaries", where all adults, not just party members, can vote for the selection of a candidate in their constituency, including possibly in Falkirk.
He said such a system would be used to choose Labour's runner for the London mayoralty in 2016 - with anyone in the capital who registers as a party supporter getting a vote.
Mr Miliband also said there should be curbs on the amount that MPs earn from outside interests and rules to stop conflicts of interest.
Former Prime Minister and Labour leader Tony Blair suggested the changes could be a "defining moment" for the party and said they would send a "very strong message" to the public that Mr Miliband would "govern for for all the country and not simply one section of it."
The Conservatives say Labour should refuse to take any more money from the unions until an entirely new system of funding is agreed.
Party chairman Grant Shapps said Mr Miliband had been "pushed into giving this speech" and that "nothing" had changed.