Falkirk MP Eric Joyce has accused Unite union officials of acting arrogantly and irresponsibly in the row over selection of a Labour candidate in the seat he is vacating.
Mr Joyce, who decided to stand down after being convicted of assault in a Commons bar, tells the Guardian party rules will need to be changed.
Labour has told the police of alleged irregularities in the selection.
Unite - Labour's biggest union backer - has dismissed the claims as nonsense.
According to an internal Labour report, Unite members were being signed up to the local party without their knowledge in a bid to rig the contest.
Labour HQ has taken over the selection contest in Falkirk but has not said why it has involved the police.
On Thursday, Labour's general election co-ordinator Tom Watson, whose office manager Karie Murphy was Unite's preferred candidate in Falkirk, resigned.
The selection of a general election candidate to replace Mr Joyce began after he was expelled from the Labour Party in the Commons last year.
Writing in the Guardian, Mr Joyce, currently sitting as an independent MP, said: "It's certain that without Ed Miliband's decisive actions in commissioning the report, Unite would have pushed legitimate Labour members out of the way to install what would have been a Unite-first, Labour-second candidate and, quite likely, MP."
He added: "The amateur, hubristic and irresponsible actions of a small number of Unite officials at the top of the organisation will require some rules to be changed to prevent another Falkirk.
"Unite members will also need to reflect on whether Unite's claim that it is simply encouraging more 'working class' MPs is a bogus argument that sits behind a crude attempt to place middle class officials and close friends into jobs."
Unite's general secretary Len McCluskey denies claims that the union tried to fix the contest and says the internal Labour investigation is a "stitch up" designed to smear the union.
Mr McCluskey told reporters he was "clearly disappointed at the developments back in London" adding: "It seems to me that the Labour leadership has now been caught up in anti-union Tory hysteria and I'm amazed as everyone else is at this."
He said he would co-operate with any police inquiry but wanted an independent inquiry that would be made public: "As far as Unite's concerned we have done nothing wrong."
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Len McCluskey: "The way its been handled by the Labour Party headquarters is nothing short of disgraceful"
Mr Miliband has dismissed the smear claims as "total nonsense" and said that, instead of defending these practices, Mr McCluskey should be "facing up to what happened in Falkirk".
"The Labour Party I lead will select its candidates in a fair and transparent way. We will act without fear or favour," said Mr Miliband.
Mr Miliband said the party's inquiry had shown "people were being signed up as members of the Labour Party without their knowledge. It says that bad practices were going on. It says people were being asked to sign up to the Labour Party on the condition that they supported particular candidates.
"We are not having this in the Labour Party."
The Conservatives said Mr Miliband should have acted sooner.
Conservative MP Henry Smith had also written to the Chief Constable of Scotland, Sir Stephen House, asking for an inquiry and suggesting Unite might have committed fraud.
Tory chairman Grant Shapps said Labour should revoke memberships of anyone signed up to the party without their knowledge.
Roger Seifert, professor of industrial relations at Wolverhampton University, said Mr Miliband must "grasp the nettle" on the issue of union power and be clear that he "makes the decisions" for Labour.
Speaking on BBC Radio 4's Today programme, he said Mr Miliband cannot deny the party is funded by unions and that funding "brings influence", but he "should make it quite clear where that influence begins and ends".
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