Protesters shouting “Tories out” have stormed a panel discussion with pro-Brexit Conservative MP Jacob Rees-Mogg at a packed fringe event of 500 activists at Manchester town hall.

Rees-Mogg received a standing ovation and loud cheers from the Conservative members in the room, but activists chanting with placards held up the start of the meeting for about 15 minutes, with two directly challenging the backbencher about his “despicable views” on austerity and opposition to abortion. Activists in the hall slow-clapped and several attempted to snatch the placards.

The targeting of Rees-Mogg by protesters as well as the numbers of activists eager to hear him speak on Brexit is a sign of the MP’s growing profile.

“There are people who are dying because of the things that you are advocating,” one of the protesters told Rees-Mogg when the MP came down from the platform to speak to him. “It’s not just a simple disagreement.”

“I don’t agree with that. I think the policies the government is implementing are making people’s lives better,” Rees-Mogg said as cameras surrounded the pair. The protester raised the number of food banks, saying precarious employment was “ruining people’s lives”.

“You’re welcome to talk to me, but it’s difficult if your intention is to shout and wave leaflets,” Rees-Mogg said. “This is not academic debate. Everything you say is despicable,” the man replied, before being led away by security staff as Rees-Mogg said it was “nice to meet you”.

Earlier in the day, in a sign of the backbencher’s growing popularity among the grassroots, Conservative activists held a mock election for party chairman, which was won by Rees-Mogg – at the launch of a group that will push for more power for ordinary members.

The new pressure group that launched on Monday is modelled on the Campaign for Labour Party Democracy, where many of Labour’s influential leftwingers began the radical party reform taken up by Jeremy Corbyn, but several Tories at the group’s launch during a conference fringe meeting on Monday said their main inspiration had Momentum, the leftwing campaigning force in Labour.

The Campaign for Conservative Democracy was launched by long-time party activist and MEP David Campbell-Bannerman, formerly chair of Ukip before he defected back to the Tories.

Their demands include more power for local Conservative associations to choose candidates and MPs, more influence in leadership elections, local autonomy in campaigning and powers to vote on policy at party conferences, which are all closely associated with the demands of CLPD since the 1970s, as well as Momentum’s current campaign.

Campbell-Bannerman called the new Tory group “a very gentle, very civilised grassroots rebellion” and said party membership would continue to decline below 100,000 unless radical action was taken.

“The point of this group is to galvanise our party and seek to make membership mean something again,” he told the meeting of 70 activists in Manchester town hall. “Labour are ahead of us in the polls … it has energy, youth and dare I say, momentum. We must keep Corbyn out of No 10 and restoring our local associations is essential to that aim.”

Campbell-Bannerman said CCHQ had imposed candidates across the country at the snap general election and that local members needed to be given more of the same. He said involvement from central office should not be “to socially engineer politically correct candidates to tick boxes or advance favoured candidates ... let’s go back to merit alone, and to candidates actually being Conservatives, which would be a good start”.

Strafford, who confronted former party chair Eric Pickles at a fringe event on Sunday about a review into the general election result, told the meeting: “In the 50 years I have been a member of the Conservative party I do not recall a more abysmal set of policies put before the electorate.”

Strafford said it was “no wonder the result was disappointing” when the Conservatives had policies to means-test the winter fuel allowance and overhaul social care, which affected the party’s core voters.

“This calamity arose because just a few people drafted the manifesto. Oh, for the days of the party conferences when we had motions for debate, and a vote at the end of them,” he said. Activists at Conservative conference have opportunities to address the auditorium but there are no votes on policy motions.

Strafford said local Tory activists in Oxford West and Abdingdon and Kensington were directed away from seats to campaign in areas with large Labour majorities, both seats that ended up being lost. “Lord help us if there is another election,” he said. “We must change or face oblivion.”

Activists voted on paper slips in a mock election for Conservative party chairman, where the incumbent, Patrick Mcloughlin, came last with zero votes. The foreign secretary, Boris Johnson, another name offered to activists on the ballot paper, came low down in the result , while Rees-Mogg topped the poll with just under a third of the vote, closely followed by the option “Anyone else”.