The Victorian Labor Party has taken the drastic step of suspending internal elections and has launched an investigation into hundreds of memberships paid for using anonymous pre-paid credit and gift cards.

The use of pre-paid cards to pay for membership was banned by the party last year amid growing concerns that the anonymous cards were being used to hide branch stacking.

Key points: Victorian Labor suspends internal elections until February

Victorian Labor suspends internal elections until February Investigation is launched into hundreds of membership payments

Investigation is launched into hundreds of membership payments Pre-paid cards used to renew 80 memberships in Melbourne's west

Pre-paid cards used to renew 80 memberships in Melbourne's west Members concerned use of pre-paid cards going undetected

Branch stacking allows groups within a party to control large blocs of votes and influence federal and state preselections.

In a motion passed on Thursday evening, the party's administrative committee resolved to suspend internal elections until an investigation into the use of the cards was completed.

All internal elections have been delayed until February 2016.

The elections are used to select delegates for the party's state conference.

"The ALP must act to ensure that all party members can be confident in the acceptance of members," the resolution stated.

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In August, the ABC revealed that the party had expelled Haykel Handal, 27, after an internal party investigation found he had used pre-paid credit cards to branch stack in the federal seats of Gellibrand, Melbourne and federal Opposition Leader Bill Shorten's seat of Maribyrnong.

Party insiders said the suspicious member activity in those seats is the result of certain factions attempting to increase their power base before the next round of preselections.

The internal investigation into Mr Handal found that in May and June last year, a "significant number" of members were signed up using a small number of debit cards, which could be bought anonymously.

Unlike a bank credit card, which lists the name of the cardholder in Labor's payment database, the pre-paid cards can be purchased without identification and are not linked to a bank account, so are impossible for the party to trace.

In recent months concern over the use of the cards has intensified inside the party.

Fairfax Media revealed earlier this month that gift cards had been used to pay the membership fees of officials from the plumbers union, and rank and file members in Melbourne's northern suburbs.

Party insiders believe there is now doubt about as many as 500 memberships, with one senior party figure saying there appeared to be widespread, systematic rorting of the system.

The use of pre-paid cards was banned after a spike in suspicious memberships caused by a change to the party's rules which allowed members to join and renew online.

The ABC can reveal that pre-paid cards have also been used to renew the memberships of more than 80 members in Melbourne's west.

Eighteen of the renewals under investigation are members in Mr Shorten's seat of Maribyrnong. The ABC does not suggest that Mr Shorten had knowledge of the transactions or the alleged branch stacking.

Branch stack has no place in ALP: Shorten

In a letter to the secretary of Victorian Labor, Mr Shorten described the allegations as highly concerning and said he was a strong opponent of branch stacking.

"Branch stacking fundamentally offends my vision for the future of the ALP," Mr Shorten wrote.

"Put simple, branch stacking has no place in the ALP."

Most of the membership renewals seen by the ABC were made this year using Australia Post "Load & Go" cards for members who appear to be of predominantly Turkish background.

Labor sources are alarmed that the pre-paid cards appear to have been accepted for membership payments without the system detecting them.

The newly announced investigation, to be headed by former state MP Liz Beattie and Garth Head, will be tasked with assessing whether or not the use of the cards had been a coordinated campaign to stack branches.

Victorian Labor's assistant state secretary Kosmos Samaras said "the ALP takes the integrity of its membership very seriously and will investigate the issues raised thoroughly".