At least 200 people have applied to stand as candidates for the new Independent Group if the UK takes part in European elections next month – amid growing signs that the contest could turn into a “proxy referendum” on whether to leave or remain in the EU.

The Observer has been told that one pro-EU former Tory cabinet minister and several former MPs and MEPs from the main parties have also put their names forward in the hope of being selected by TIG. If the UK has to extend its membership by several more months, the EU has made clear it will have to take part in elections to the Brussels and Strasbourg parliament on 23 May.

The Independent Group’s team of eight former Labour and three former Tory MPs – all strongly pro-Remain and in favour of a second referendum – have applied to the Electoral Commission to register as a party and take part in the elections under the name Change UK – The Independent Group.

They believe the May elections across the EU could serve as an ideal and timely electoral launchpad for their fledgling party, and plan to use the slogan #rulemakersnotruletakers.

They want to stand candidates for all 73 seats across the 12 UK regions and believe the contest, conducted under a regional-list system in which seats are allocated to parties in proportion to their share of the vote, could give them their first electoral successes, particularly in the Remain-dominated London and South East regions.

The 11 independent MPs will begin selecting candidates this week.

Facebook Twitter Pinterest The Independent Group’s interim leader, Heidi Allen, holds the group’s first public meeting in her South Cambridgeshire constituency on 30 March 2019. Photograph: Nicola Tree/Getty Images

Labour has also started selecting its candidates and mobilising staff for a campaign. Labour’s 20 existing MEPs, who had expected (like all UK members) to be giving up their seats on 29 March, were given until last Friday to say if they wanted to continue. All but four have said they want to carry on.

The leader of the Labour MEPs, Richard Corbett, who has put himself forward again, said the elections would be seen as a big opportunity by smaller UK parties from both sides of the Brexit divide. From the pro-EU side The Independent Group would be hoping for a breakthrough, while the SNP, the Liberal Democrats and the Greens would also be arguing the case for Remain.

Equally, from the pro-Brexit wing, Ukip and Nigel Farage’s new Brexit party would be hoping to mobile anti-EU feeling and a sense of betrayal that Brexit had not been delivered. On Friday, Farage tweeted: “I will lead @brexitparty_uk into the European elections. The fightback to save Brexit has begun.”

Corbett said that if the UK did take part and Labour had not by then secured a commitment to a second referendum, it would be hit hard unless it argued for another public vote in its European election manifesto. “In my view Labour would be badly damaged if it did not argue strongly for a public vote on any Brexit outcome.”

At the last European elections in 2014 Ukip won the most UK seats, securing 24, while Labour won 20 and the Tories 19.

On Friday, Theresa May wrote to the president of the European council, Donald Tusk, asking for an extension to UK membership until 30 June while she battles to win cross-party agreement on a way forward. Tusk, meanwhile, wants EU leaders to offer at a summit next Wednesday what he has described as a “flextension” in which the UK would be given a year-long extension with an option to come out early if and when a Brexit deal is ratified.

Government sources said this could mean that the UK parties take part in campaigning for the European election, but could then pull out as late as 22 May, if parliament were to have agreed a Brexit deal.

Chuka Umunna, spokesman for The Independent Group, said: “So many people are telling us they’re fed up with the main parties and want a real choice when they come to vote. We do not have the big money of the two establishment parties, so we will be launching a European elections fundraising drive. We want to give the public the opportunity to send a message they want to remain in the European Union – and our support for a confirmatory People’s Vote is 100%.” On Friday evening a Downing Street spokesman said the government’s intention was still to try to find a solution which would mean the UK did not have to take part in May’s Europan elections.

“We have made serious proposals in talks this week, and are prepared to pursue changes to the political declaration in order to deliver a deal that is acceptable to both sides,” said the spokesman. “We are ready to hold further detailed discussions this weekend in order to seek any such changes in the run up to European Council on Wednesday. The Government is determined to work constructively to deliver the Brexit people voted for, and avoid participation in the European Parliamentary elections.”