The Co-operative Group was in chaos on Wednesday night after the man brought in only four months ago to reform the troubled chain of supermarkets, funeral homes and pharmacies quit the board.

Lord Myners tendered his resignation in the face of mounting opposition to his plan to reform the way the country's biggest mutual is run.

On course to report a £2bn loss next week, the Co-op has been mired in turmoil since it emerged its bank had a £1.5bn hole in its balance sheet last May and its former chairman, the Reverend Paul Flowers, was embroiled in a scandal involving class A drugs.

Myners, who was chairman of the Guardian Media Group until 2008 when he joined the Labour government at the height of the financial crisis, was brought in with a mandate to draw up a blue print for a new-look Co-op.

His resignation came hours after members of the Co-op voted to remove the three directors who approved the controversial £6.6m pay packet for chief executive Euan Sutherland who quit last month after the deal was leaked to the Observer.

Myners has faced overwhelming opposition for his plans to reform the Group – which include tearing up the existing boardroom structure and replacing it with a plc style model.

He has referred to "bullying" tactics he has faced since joining the board in December and a warning from one influential member of the board that they could block his plans to reform the Group which need the backing of two thirds of the votes.

The former City minister is thought to be staying on to complete his controversial review, which is unlikely to be accepted by the regional boards and independent societies that run the organisation.

The three directors who were voted off were Liz Moyle, Steven Bayes and Patrick Grange who all had seats on the remuneration committee that approved the £6.6m two-year pay deal for Sutherland, when he was appointed boss of the group 10 months ago.

The three who lost their seats are also representatives of the regional boards which control 78% of the votes at annual meetings and will also have a major role in approving the reforms being proposed by Myners who is the only independent director on the board.

The changes to the board are thought be the result of a vote by the 900 members who sit on the influential area committees that represent the views of the seven million owner-members of the UK's largest mutual and in turn feed in to the regional boards.

Five new directorships were up for election, including filling the seat vacated by former chairman Len Wardle who quit at the height of the Group's troubles last year after Flowers was filmed handing over cash for illegal drugs. One position was vacant because Stuart Ramsay retired.

Myners is proposing scrapping the current boardroom structure which currently comprises 15 representatives from the regions – including a farmer, a university lecturer and a nurse – and five from the independent societies. Until Wednesday night it also included Myners who only took on the role – for a salary of £1 – in December.

He was first the non-executive independent director and is accustomed to financial crises, playing a central role in the government response to the banking crisis and in the removal of Fred Goodwin from the top of Royal Bank of Scotland when the bank was facing collapse.

The largest independent Co-op, the Midcounties, had voted on Monday night against the reform package. The chair of the Co-op Group is also from an independent society, Ursula Lidbetter, and runs the Lincolnshire Co-operative.

Other independent societies were not speaking publicly on Wednesday on whether they backed the stance of the influential Midcounties.

But Myners remains under pressure to rewrite his reform plans following the intervention of Midcounties and the seven regional boards that held meetings last weekend at which concerns were raised about the proposals.

Under his proposals – rushed out in the wake of Sutherland's resignation and not yet finalised – the members of the Co-op would no longer sit on the board but be represented by a members' council.

Sutherland was one of eight members of the executive team to be handed "retention payments" equivalent to the size of their salaries. Sutherland was on a £1.5m salary and had been promised two retention payments of £1.5m for 2013 and 2014. His current stand-in, former WM Morrison's finance director Richard Pennycook, has a £900,000 salary and a retention package for 2013 and 2014. He is under pressure to reject the payouts.

The bank is preparing to reveal the pay deal of the boss of its bank, Niall Booker, who was part of the team assembled by Sutherland when the financial problems in the bank were uncovered last May.

Last month Booker admitted the Co-op bank needed another £400m to cover the cost of mis-selling scandals. But this means the debt-laden Group needs to find another £120m if it is to prevent its stake in the bank falling below 30%.

But it is not yet clear if it will put up the cash as next week its expected to report losses of at least £2bn.