By KIRSTEN LAWSON and AAP

The Labor Party is facing a union revolt with the defection of two Victorian union leaders, and the powerful Manufacturing Workers' Union confirming yesterday that it was considering disaffiliation with the party.

The state secretary of the 18,000-strong Electrical Trades Union, Dean Mighell, quit the ALP on Friday and immediately joined the Greens. United Firefighters' Union state secretary Peter Marshall also quit the party.

The news came as federal Labor frontbencher Lindsay Tanner warned his party was in big trouble on the ground.

MWU federal secretary Doug Cameron said last night Mr Mighell's decision to quit was understandable and reflected union frustration with Labor.

His union would consider disaffiliation at its July conference. Other options were joining a party such as the Greens, starting a new party for working people, or staying with Labor and trying to make it take its obligations to working families seriously.

''Their capitulation to neo-liberalism is quite reprehensible,'' he said.

''They should be taking a more independent view and have a more critical analysis of free trade, competition policy, privatisation and all of those issues that you can't distinguish Labor from the Liberals on.''

Mr Mighell, president of the Victorian Trades Hall Council and of the Electrical Trades Union, said the party should stop trying to compete with the Liberals.

''I'm a traditionalist when it comes to Labor values,'' he said.

''I believe the ALP was there to represent the aims and aspirations of working people and as a trade unionist first and foremost it's hard to reconcile my beliefs with the actions of the state and federal ALP.''

He would argue for disaffiliation.

There is speculation other major state unions may follow suit, which would involve a potential major loss of funds to the ALP. ALP federal president Greg Sword said the Victorian ETU alone provided $80,000 last year.

But Labor Leader Simon Crean said he would not be put off his drive to modernise Labor's relationship with the unions.

''I'm not going to walk away from that. If people find that difficult and make decisions personally that they can no longer stay in the party, that is up to them,'' Mr Crean said.

''I am not going to support any mechanism that takes us backwards.''

Mr Tanner said he was disappointed to see people who could have played an important part tackling Labor's ''huge'' problems jumping ship.

He urged patience, saying Labor had already moved on asylum-seekers and would develop a more compassionate policy.

''I'd say to party members, don't give up hope, don't give up the faith, and be a bit patient,'' he said.

Mr Tanner called for radical reform, including having the president, conference delegates and even the party leader, elected by ordinary members.

''I have been campaigning about these issues for 10 or 11 years and we are now at five minutes to midnight,'' he said in a television interview.

''The Labor Party is in big trouble as an organisation out on the ground.

''We've got to start getting some serious branch activity going. We've got to give people some genuine role and some influence and fulfilment.''

Young Labor, meeting in Canberra, also called for a radically different policy on asylum-seekers, in a resolution supported by all factions. Young Labor called for an end to detention.

Victorian secretary of the Manufacturing Workers' Union Craig Johnston said Victoria would make its own decision on disaffiliation next month.

''[Labor's] position on the refugees has been outrageous, their position on industrial relations at the last election was crook, their position on almost every social justice issue is poor.

''While it is better than the Liberals, it is nowhere near enough for any party that calls itself a social democratic party, they're a total embarrassment.'' Meanwhile, Greens leader Senator Bob Brown, who refused to confirm Mr Mighell's membership until he did so himself, said he would welcome any such member.

Senator Brown said unions were realising that the Greens had strong industrial-relations policies.

Workplace Relations Minister Tony Abbott said the potential desertion of the ALP was an indictment of Mr Crean's leadership.