Scottish Labour is considering backing a second independence referendum in a dramatic reversal of policy by the party leader, Richard Leonard.

Party sources have told the Guardian that Leonard will raise that possibility at Labour’s Scottish executive committee on Saturday, where it could also discuss demands for it to split formally from the UK Labour party.

Leonard told his shadow cabinet on Monday he wanted to hold a special conference in May to decide Scottish Labour’s position on a fresh independence referendum, where he would present proposals for Labour to back a federal UK.

Sources close to Leonard said he would consider asking for a pro-federal option to be included in a multi-option referendum on independence. “Labour would be more willing to consider supporting a second referendum if it was multi-option,” one source said.

That proposal could be embraced by Nicola Sturgeon, the first minister and Scottish National party leader; she told the Daily Record newspaper before December’s election she would discuss that with Labour. “If they bring forward a credible proposition, then of course there has to be a discussion, but it’s not going to change my mind on independence,” she said.

The dramatic proposals follow a torrent of complaints from former Scottish Labour MPs who lost their seats in the December general election, where the party suffered its worst defeat of the modern era, polling just 18.6% of the vote.

Their complaints echoed calls for a rethink by Monica Lennon, a Labour MSP who sits on the Scottish executive and shadow cabinet, and Grahame Smith, the outgoing general secretary of the Scottish TUC.

On Thursday, Clive Lewis, who is running to replace Jeremy Corbyn as UK leader, told the pro-independence National newspaper that Scottish Labour should back a referendum, although he supported “radical federalism” rather than independence.

Supporters of these policy changes insist Labour has to respond to successive election defeats by emphasising its independence and accept Sturgeon’s claim she has a mandate to stage a fresh referendum.

Labour lost six Westminster seats to the SNP in December, again leaving it with one Scottish MP, as voters rebelled against Jeremy Corbyn’s stance on Brexit and his leadership. Scottish Labour also lost both its European parliament seats in last May’s European election – the first time Labour as never had a Scottish MEP.

Leonard told his party’s shadow cabinet on Monday he wanted to hold a special conference in May to finally decide on whether to back staging a second independence vote, without any conditions.

It is understood Leonard still opposes holding a second referendum and proposals for Scottish Labour to split from the UK party, but the issue will dominate the political agenda in Scotland after the SNP won 48 of the country’s 59 Westminster seats last month.

Sturgeon is hoping for a constitutional battle with Boris Johnson over his refusal to give Holyrood the legal powers for a referendum, using that refusal to build public support for one.

Scottish Labour was bounced into backing a second referendum when John McDonnell, the shadow chancellor, suddenly announced this was party policy during the Edinburgh festival last year and implied it was backed by Corbyn.

Buckling to intense pressure for a rethink from Leonard and other senior party figures, Corbyn refined the policy to make it more conditional. He said Labour would only support an independence vote after two years or more of a Labour government in London.

Leonard’s decision has been furiously criticised by his Holyrood colleagues, and will be opposed by Ian Murray, Scottish Labour’s sole surviving MP, who is campaigning to become the UK party’s deputy leader on an anti-independence ticket.

Lennon and Neil Findlay, a Labour MSP who chaired Corbyn’s leadership campaign in Scotland, argue the scale of Labour’s defeat means it has to accept public backing for Sturgeon’s stance – a position echoed by Ged Killen and Paul Sweeney, former MPs who lost their seats in Glasgow in December’s election.

Lennon told the Daily Record three days after the election that Johnson should allow Holyrood to decide whether a referendum was needed. “The SNP blueprint for independence is flawed and will disappoint many progressive Scots who are fed up with austerity. Nevertheless, the future of Scotland must be decided by the people of Scotland.”