Ed Miliband is heading for the biggest policy row of his leadership after a powerful alliance of Labour activists, unions and green supporters rallied behind plans to force the party to adopt renationalisation of the railways as official policy.

The issue of how far Miliband will commit Labour to public ownership of the railways – a policy that has strong public support – is now seen by many in the party as a litmus test of how bold he will be prepared to be when drawing up the election manifesto.

The Observer has learnt that more than 50 local Labour parties, as well as the London and Wales regions and all the main unions, are planning to vote to bring all rail franchises back under national ownership when they expire, at a key meeting of the National Policy Forum this month.

Those behind the renationalisation plan are confident they can win a vote that would force the leadership's hand.

Supporters of the phased renationalisation policy were furious at reports that the leadership had decided on a less ambitious option, under which the state would be able to bid against private operators, rather than private operators being locked out of the process.

One senior figure in the party said: "This would please no one. It would simply be a return to the policy we had in 2010. It would be a total cop-out."

The rail union Aslef has tabled what is likely to be one of several amendments to the Policy Forum backing the more radical approach. "Such a step would mean our Labour government would not have to be occupied by an expensive and complex franchising process whilst minimising structural upheaval in the industry and dealing with the unsustainable way that rolling stock is currently procured," it says.

"The substantial savings this would accrue could be invested in wider public services including a cut to fares for hard pressed passengers."

While a vote in the policy forum would not commit the leadership to make a manifesto commitment, it would create heavy pressure to do so.

In a letter to Sunday's Observer, a group of green campaigners, businesses, academics, disability and social justice campaigners, unions (including superunion Unite)and transport experts also join forces to demand a return to public ownership, arguing that the pursuit of profit in rail does not work.

Neal Lawson, chair of the centre-left pressure group Compass said. "Just giving the state the right to bid is a fudge that won't work, will cost hundreds of millions of pounds and was rejected in the 2010 Labour manifesto. The party and the public want rail in the public's hands."