Bitter disputes between Vote Leave, Leave.EU and Grassroots Out may lead to none of them being given benefits of official lead campaign designation

An acrimonious feud among the leading groups pushing for Britain to exit the EU could result in none of them being designated as the official campaign, it was claimed on Friday.

Arron Banks, co-founder of Leave.EU, said that the prospect of non-designation had become “a huge worry” and that potentially this could leave the campaign at a disadvantage.

The Electoral Commission is expected to nominate a lead organisation on each side of the run-up to the EU referendum, which David Cameron has indicated could take place on Thursday 23 June.

Both lead organisations will get a grant worth up to £600,000, campaign broadcasts and free mailing. They will also be allowed to spend up to £7m, instead of £700,000, the limit that applies to other registered campaign groups.

Banks said: “If it is bitterly contested, and if designating is going to be controversial, the commission has a right to choose not to designate.”

A commission spokesman confirmed this was correct. He said that if the commission chose to designate a lead campaign group on one side but not the other, that lead body would not get the £600,000 grant, the broadcasts or the free mailing. But it would still be entitled to spend up to £7m, potentially giving it a huge advantage provided it could attract sufficient donations.

Britain Stronger in Europe seems certain to get the lead designation on the in side because it has no rivals, but Banks fears the out side could suffer because there are three prominent groups in the running: his grassroots-focused Leave.EU as well as Vote Leave and Grassroots Out (GO).

Vote Leave, which is Westminster-focused and MP-dominated, has been the most prominent of the trio but on Friday it suffered fresh setbacks when it lost key Labour and Green support and its two most prominent officials were viciously denounced by Banks.

In an open letter to MPs, perpetuating a feud that has been running for many weeks now, Banks said that Matthew Elliott, Vote Leave’s chief executive, and its campaign director Dominic Cummings, were “two of the nastiest individuals I have ever had the misfortune to meet” and that he “wouldn’t put them in charge of the local sweet shop”.

Banks has tried to engineer a merger, but has been rebuffed. Although personal animosity plays a part, he and the Vote Leave leadership are also divided over strategy, with Banks and Leave.EU much more committed to campaigning on immigration.

Banks told the Guardian that he did not think Vote Leave would get the lead campaign group designation because it was “now just a Conservative group with one Ukip MP on it.”

He also confirmed that he had tried to persuade Vote Leave to join his group and GO in setting up a single board with the intention of applying for lead designation and sharing the Electoral Commission grant between the three groups. Vote Leave rejected the idea.

In his letter to MPs he said they should now support GO if they wanted to campaign for Britain to exit the EU, and a joint application between Leave.EU and GO for lead designation now seems likely.

Paul Stephenson, communications director for Vote Leave, declined to respond to Banks’ personal attack on Elliott and Cummings. “We wish Arron well,” was all he would say on the subject.

But he said that he thought Vote Leave was in the best position to get nominated as the lead campaign group on the out side.

“We are a cross-party body. We have Labour MPs backing us, we have got Ukip’s MP, we have Liberal Democrats,” he said.

“We are a very professional campaign. We have people who have won referendum campaigns.”

But Labour Leave, a group that had been part of the Vote Leave coalition, effectively split on Friday as some of its key figures decided they no longer wanted to work with the group.

John Mills, the Labour Leave director and Vote Leave deputy chair, put out a statement saying that Labour Leave still supports Vote Leave. But Kate Hoey, the Labour MP and co-chair of Labour Leave, told the Guardian that its staff had been moving out of Vote Leave HQ and that from now on they would be doing their own thing.

“Labour Leave will now be independent of Vote Leave and has told the Electoral Commission that we do not endorse Vote Leave for designation,” she said.

Acknowledging that Mills was still committed to Vote Leave, Hoey said the group, or at least her faction, would probably change its name to Labour GO.

Jenny Jones, the Green peer, also said she was withdrawing her backing from Vote Leave. Referring to its decision to appoint Lord Lawson, the Conservative former chancellor as its chair, she tweeted: “Will vote to Leave EU but can’t work with an organisation with so little judgement as to put Lawson at its head.”

Nigel Farage, the Ukip leader, said on Friday his party was now supporting GO.

He described it as a “genuine cross-party group” and said it was “a pleasure to work with people who understand that this issue [leaving the EU] matters more than party politics and tribal division”.