The Labour party is expected to set up a people’s convention to study radical reforms of the UK constitution, possible federalism and scrapping the House of Lords after Brexit.

Scottish Labour sources said they were confident that Jeremy Corbyn, the UK party leader, would set up the Labour-led convention by the summer after he supported calls for the initiative earlier this year.

The proposal has been pushed by Kezia Dugdale, the Scottish Labour leader, and senior figures such as Gordon Brown and Lord Falconer, as an alternative to independence for Scotland.

Dugdale argues that reforms should lead to a new federal structure for the UK, with the Lords replaced by an elected federal senate. Her proposals were overwhelmingly endorsed in a vote at Scottish Labour’s spring conference on Friday.

Dugdale said at a conference fringe event that the initiative would be led by Corbyn and John Trickett, the Labour MP who has been reviewing constitutional policy for the party.

“It’s, yes, about devolution, but it’s also about electoral reform; it’s also about abolition of the House of Lords; it’s a whole serious look at power and who has it, how it can be better shared, in the interests of working people,” she said.

In January, Corbyn told party leaders and activists in Glasgow that a “people’s constitutional convention” was needed to “put the public back into our economy and break the grip of vested interests”.

It would look into redistributing powers and spending relating to agriculture, fisheries and social programmes that are currently controlled by the EU to the UK’s nations and English regions, Corbyn said.

“Brexit provides us with the chance [to] fix a rigged system that doesn’t work for the majority of people. It is pointless to repatriate powers and resources from so-called faceless bureaucrats in Brussels if they are locked away in Downing Street,” he said.

Although Corbyn said a senate would represent the UK’s nations and regions, he has so far stopped short of explicitly endorsing Dugdale’s call for a federal UK. Her officials admit they will be expected to argue the case for this within the UK Labour party.

She also acknowledged on Thursday that Corbyn was “not mad keen” on her proposals for a new act of union to embed federalism, a plan central to her efforts to arrest plummeting support for Scottish Labour.

Dugdale was referring to the Act of Union 1707 that unified the Scottish and English parliaments at Westminster, but Corbyn believes it could be seen to exclude other parts of the UK.

The Liberal Democrats have argued for federalism for decades, but constitutional experts and critics of the proposal warn that England would be the most powerful partner in a reformed UK, giving it far greater voting power in a new senate.

Dugdale and her supporters insist that it is the logical extension of increasing devolution, with the Scottish parliament able to set income tax rates and having increasing control over key social security powers. The Stormont assembly in Belfast also has tax and welfare powers. Limited tax powers are being mooted for the Welsh assembly in Cardiff.

Scottish Labour believes federalism will offer a potentially attractive middle way for Scottish voters who repeatedly support increased autonomy for the devolved parliament in Edinburgh. With support for independence at about 45%, Nicola Sturgeon, the Scottish National party leader and first minister, is close to calling a second independence referendum in a final effort to keep the country in the EU.

Ian Murray, Scottish Labour’s sole MP and a close ally of Dugdale, told the conference in Perth that federalism was the most intelligent solution because it would allow the UK to help fund Scottish public spending, which is £1,600 higher per head than the UK average, and provide wider economic security after Brexit.

After the collapse in North Sea oil revenues, Scotland faces an immediate £15bn black hole in its public spending plans, significantly higher than the long-term £11bn estimated cost to the economy of leaving the EU.

The union “allows for the redistribution of financial resources across the UK”, Murray said. “Dismantling this redistributive system would be financial[ly] disastrous for Scotland.”

There were signs that the federalism proposal could win back alienated Labour voters who supported independence in the 2014 referendum, after the former Scottish Labour chairman Bob Thomson, who backed a yes vote, said he supported it.

Thomson was paraded by pro-independence campaigners three years ago as evidence of the widespread appeal of independence to working-class Scottish voters.

He told the conference that if Sturgeon called another referendum, Labour could insist that it included a third option of federalism, which Sturgeon’s predecessor Alex Salmond had actively considered in the early stages of the 2014 campaign.

Thomson said the dangers of England dominating a new federal system could be offset by introducing a strict rule that major changes in UK policy, such as on foreign affairs or the economy, could only go through if all four parts of the UK agreed.