Labour is facing the biggest crisis in its history as the leftwing pressure group Momentum tries to purge it of moderate MPs and councillors in a systematic takeover of the party, former deputy leader Roy Hattersley has warned.

His dramatic intervention comes as details can be revealed of a vicious power struggle between moderates and leftwing forces in Momentum and the Unite union that now threatens to split the ruling national executive committee (NEC) and reopen party divisions.

The row, over the selection of Labour’s parliamentary candidate in the marginal seat of Watford, has led local party officials to launch an official complaint to the NEC after they were ordered to place a Momentum-backed senior official of Unite on their final selection shortlist, days after having rejected him at interview.

In a letter leaked to the Observer, members of the Watford party who sit on the selection committee claim that party democracy is being subverted.

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Claims that Momentum is attempting to purge anyone who is insufficiently supportive of Jeremy Corbyn in its strongholds across the country intensified last week after a string of councillors in Haringey, north London, were ousted in selection contests, or chose to stand down, in what has been described as a coup attempt by Jeremy Corbyn’s “revolutionary guard”.

Last week, the award-winning novelist Linda Grant, who joined Labour in 2010 and became a leading activist in Haringey, resigned from the party, having become severely disillusioned.

The row in Watford adds a new dimension to Labour’s widening split, with claims that senior party officials on the NEC, where Corbyn supporters now have a majority, are trying to override democratic decisions taken locally when they do not go their way. This, they say, is happening at the same time as Corbyn allies claim to be introducing more democracy at all levels of the party to empower members.

Writing in the Observer, Hattersley says Momentum now poses a far more serious threat to Labour than Militant did three decades ago. He says that unless “Real Labour” challenges what he calls “subversion” by far-left forces, democratic socialism could die a slow death.

“Thirty years ago, moderates won the battle against Militant by taking the campaign to the country and demonstrating that genuine democratic socialism was worth fighting for. Now Momentum is winning by default. ‘Real Labour’ needs a better response to the prospect of a far left takeover than glum opposition to Len McCluskey [Unite’s general secretary] and all his works – understandable though that is.” He adds: “Politicians have a duty to defend their beliefs. Democratic socialism will not succeed, and may even not survive, unless it defends its ideological frontiers.”

The row in Watford erupted after Mike Hedges – the chair of Unite’s London and East regional political committee and the preferred candidate of Momentum to stand in the seat – was interviewed by the local selection committee last weekend but not placed on the shortlist of four.

The committee judged he had performed less well than others.

Facebook Twitter Pinterest Roy Hattersley: ‘30 years ago, moderates won the battle against Militant by taking the campaign to the country’. Photograph: Murdo Macleod/The Guardian

But senior party sources and officials in the Watford party say that Hedges was then reinstated after an intervention by NEC member Jim Kennedy, a senior Unite official. Local party members were incensed at being told by officials that the reason was that Hedges’s candidacy had not been properly considered in line with the rules. All those present at the relevant meetings confirmed at the time that proper procedure had been followed to the letter.

Furious members of the selection committee have now written to every member of the NEC protesting in the strongest terms.

Their letter states: “We are writing in utmost protest concerning the actions of some members of the NEC to overturn the decision of the democratically elected Selection Committee for shortlisted applicants for the PPC of Watford by the unilateral imposition of an applicant, Mike Hedges from Islington.

“Watford is a key marginal and any perception that a candidate is being imposed on local people by Labour Party HQ or an affiliated union will end up handing this seat to the Tories. We lost by 2,000 votes at the last election. We need this seat to form a Labour Government under Jeremy’s leadership.”

The letter goes on: “We are deeply worried that the democratic processes of our Party are being undermined in such a manner and a candidate is being imposed in such a way. Let us be clear, this complaint is nothing to do with the individual applicant concerned, but with the blatant disregard for the process.”

The six authors of the letter - Sarah Flynn, Omar Ismail (procedures secretary), Ahsan Khan, Asif Khan, Linda Meehan and Sue Utting – demand that the original shortlist be reinstated.

NEC moderates are known to be deeply concerned at the Hedges reinstatement and believe the NEC has no power to act in such a way. One member of the Watford Labour party said the actions of the NEC were “more like North Korea than a party that pretends to want to become more democratic”.

Richard Angell, director of the centrist Labour pressure group Progress, said: “Momentum members will be horrified that party democracy is being cast aside by the Momentum leadership and their close friends in Unite. Surely everyone can agree that in Jeremy Corbyn’s Labour party it is the members – new and old – that should decide who stands for Labour, not centrally imposed people with a carpet bag in one hand and a damaged parachute in the other.”

Momentum said: “Mike Hedges is a candidate with huge amounts of support from both affiliated unions and local members. He has the nomination of every single trade union affiliated with the CLP, including Unite, GMB, CWU, Usdaw, the Bakers’ Union, Aslef, the Fire Brigades Union and the TSSA.

“He also has a significant amount of support among the local members, many of whom signed a joint letter in support of him when they found out he was excluded from the shortlist. A selection process which prevents local members from nominating candidates and ignores the unanimous preference of every affiliated trade union can only be described as undemocratic, and one which makes a mockery of Labour’s historic union link.”

A Labour spokesperson said: “The shortlist was decided in line with Labour’s procedures and it is Labour’s members in Watford who will choose their candidate.”