A new "super-faction" that unites most of the Victorian Labor Right has been formed, boosting opposition leader Bill Shorten's factional clout and isolating a rump of MPs aligned with the shop assistants' union, including Deputy Premier James Merlino and federal power broker David Feeney.
The recent formation of the "Centre Unity" faction effectively hands control of the party's influential public office selection committee to a handful of power brokers, including Mr Shorten, his Right faction ally Senator Stephen Conroy and the Left's Senator Kim Carr under the terms of a "stability agreement".
About 80 per cent of the powerful committee, which oversees pre-selections and the party's internal forums, will be controlled by the Left-Right bloc, while the re-alignment will also have an impact on the forthcoming Labor national conference.
Centre Unity will comprise forces loyal to Mr Shorten and Senator Conroy, allies in the Transport Workers Union and Australian Workers Union and a high profile band of state and federal MPs who have defected from the Shop Distributive and Allied Employees' Association (SDA) and christened themselves "moderate Labor".
The split within the SDA between the rank and file members and the industrial arm is seen as a backlash against union secretary Michael Donovan's influence.
State ministers Adem Somyurek and Robin Scott, cabinet secretary Marlene Kairouz and federal MP Anthony Byrne are among those who have defected from the powerful SDA grouping to form "moderate Labor" and align with the new Centre Unity bloc.
Mr Merlino is close to Premier Daniel Andrews.
Several sources said the situation is still "evolving."
Part of the push from within the Right is for all its state MPs to caucus together in the Victorian parliament. For years different smaller groupings have met on Spring Street.
The shake-up will potentially end a decade or more of instability in Mr Shorten's Labor Right power base, which is split into four groupings aligned with different unions.
The last time the state-based Labor Right met together was the last time the ALP was in office. The most recent iteration of the Right in Victorian Parliament has resulted in MPs from the Conroy group meeting with the National Union of Workers MPs and the Shorten-backed AWU MPs sit with the SDA.
The realignment of forces follows anger and frustration in the Right over the allocation of ministerial and committee positions in the new Andrews government.
The new Centre Unity faction has also invited the NUW-aligned grouping to join them, although at this stage the NUW is considering its options.
If that occurs the federal and state MPs aligned with the SDA, including Mr Merlino, Mr Feeney, Senator Jacinta Collins and state MPs Lizzie Blandthorn and Daniel Mulino would be left out in the cold.
Mr Feeney is overseas at the moment in Turkey and has not made a decision. Mr Merlino was tight-lipped on Tuesday.
The creation of the Centre Unity faction boosts the size of the grouping loyal to Mr Shorten ahead of national conference in July and, if the new grouping holds, will also boost the influence of Mr Shorten's grouping during pre-selections, starting with state pre-selections around 2017.
Several Labor party MPs and sources told Fairfax Media the alliance between Centre Unity and the Socialist Left grouping was comparable to the cross-factional grouping that operated in 2008-09 and was led by former Labor senator Mark Arbib and MP Anthony Albanese, effectively controlling NSW.
Others, however, mocked the new Centre Unity grouping and pointed out it was the fourth factional re-alignment in seven years.
