Spending on selection campaigns is to be capped by Labour after the party vowed to “mend, not end” its relationship with trade unions.
The announcement comes amid a damaging feud with the party’s biggest donor, Unite, over claims of ballot-rigging in Falkirk.
Unite is accused of signing up its members to the Labour Party in the Scottish town, some without their knowledge, in a bid to get its preferred candidate selected to succeed MP Eric Joyce in 2015.
Deputy Labour leader Harriet Harman said a spending cap would stop prospective MPs having to rely on union backing or personal wealth for funding.
But she stressed the link between the party and unions was important because it meant “people at work having their voice heard in the corridors of power”.
Pledging to “mend, not end” the relationship, Labour leader Ed Miliband said events in Falkirk had “betrayed the values of our party” and confirmed the public’s worst suspicions that politicians were “in it for themselves”.
Reforms such as the spending cap would ensure future selections “are always fair, open and transparent”, he wrote in the Observer.
Mr Miliband, who is expected to make a speech this week setting out further reforms, made the vow in the face of a renewed assault from Unite general secretary Len McCluskey.
The union leader, who has insisted there was no wrongdoing, urged Mr Miliband to “step back from the brink of a ruinous” division” and “stop playing into the hands” of the Tories after the party referred the matter to police.
The row has plunged Mr Miliband into the most testing challenge of his leadership – with the Conservatives exploiting it to press home claims he is too weak to stand up to the party’s significant financial backers.
The Tories have also called on Labour to reveal the extent of union efforts to recruit large numbers of their supporters to local parties after an official Unite document showed it was targeting a total of 41.
Ms Harman said the particular issue in Falkirk – related to a now-axed scheme allowing unions to pay the party membership fees of people it recruited for an initial period – was an isolated case and now “dealt with”.
But she said there were also “a number of constituencies where for different reasons issues are being looked into”.