Former vice-presidential candidate Sarah Palin has joined leading national Republican figures in rejecting the party's nomination for this year's congressional election in a northern New York state in favour of a fiercely conservative third-party candidate.

The local Republican party nominated Dede Scozzafava, a moderate, pro-choice candidate who backs same-sex marriage, to stand for the seat. But Palin and other high-profile Republicans are backing a businessman, Doug Hoffman, running on the ticket of the Conservative party, leading many to question whether the party's leaders have lost touch with rank-and-file voters. Scozzafava's positions on social issues and support for some Democratic causes have won her enmity from the increasingly hard-right national party.

"Unfortunately, the Republican party today has decided to choose a candidate that more than blurs the lines," Palin said last week. "There is no real difference between the Democrat and the Republican in this race."

The endorsement indicates that many in the national party are more interested in ideological correctness than party affiliation. They have irritated local Republican leaders who say support for Hoffman, who calls himself the real Republican in the race, will split the conservative vote and hand the election to the Democratic party candidate, Bill Owens, an attorney and retired air force captain.

The split illustrates a continuing debate over the future of the opposition party. Republican activists have driven most moderates and social liberals from the national party in recent years, and its power base has shrunk to the south-eastern and great plains states.

• This article was amended on 26 October 2009. The original said that Republican voters nominated Dede Scozzafava. This has been clarified.