Labour has settled on a new way to select its leader, which gives members and affiliates, including unions, a say and puts sitting MPs in a minority.
Under the current rules, only MPs vote on the leader, but under the proposed rules - due to be signed off at the party's annual conference in November - MPs will hold 40 per cent of the vote, members 40 per cent and affliates 20 per cent.
An earlier proposal to give "supporters" who were not members 2-3 per cent of the vote, which was understood to have leader David Shearer's support, has not gone ahead.
Another option to have MPs vote as a bloc, where the whole 40 per cent of their vote would be cast for the candidate preferred by MPs, did not draw much support and did not go ahead.
Under the draft rules a leadership selection would be triggered when the position of leader became vacant or when two thirds of the caucus petitioned the party president for one.
Otherwise, as a matter of course, a caucus vote on the leader would be taken no later than three months after a general election.
If a majority at that vote did not endorse the leader, that would trigger the party-wide process to pick a leader.
Voting will be preferential and concurrent in all cases.
In the current term the endorsement vote by the caucus would take place in 2013.
Labour President Moira Coatsworth said Shearer had strongly supported the review.
"We want the Labour Party to be modern and engaged with our communities. We want members to be able to have a direct say in issues like policy development, selecting who represents them in Parliament and the leadership," she said.
"We want to create strong regional networks and become more active at a local community level."
The proposed law changes also tilt the balance towards local representatives at electorate candidate selection meetings and streamline the selection proces for the party list.
Candidates for the list will now be ranked in groups of five by each region, and the moderating committee that puts the final list together will be made up of the party's ruling council augmented by three MPs.
The leader and deputy will take the top two slots, but the rest will be selected by preferential voting. But the committee will have to take into account the need to "fairly represent" Maori, women, men, ethnic groups, age, youth and ensure a geographical spread. It will also take into account "strategic selection criteria" set by the party at each election.
Shearer said at the 2011 election there was a feeling the party was not responding as quickly as it should. The membership was falling away and there was a feeling in the party membership they did not have enough say on key issues.
He would not be drawn on whether he thought under the new system he would have won the leadership in the run-off against David Cunliffe.
Coatsworth said the recommended changes went a long way to reflect party members’ ideas for change. They also reform the party to better reflect the MMP environment.
The changes also set up regional organising hubs that Labour hopes will coordinate organisation and campaigning across several electorates and help take the focus off individual electorates and put the stress on the party vote.