Labor stalwarts have warned of a dying party unless major reform is embraced and more power given to the rank-and-file membership.
But the party's national conference was presented with only a watered down version of the reforms championed by Senator John Faulkner and former premiers Steve Bracks and Bob Carr.
Factional bosses argued behind the conference scenes yesterday about how much ground to give the membership.
Prime Minister Julia Gillard successfully negotiated a last-minute deal that averted an embarrassing backdown on the reform issues she wants.
She won support for the rank-and-file to directly elect a ''component'' of delegates for the party's future policy-setting national conferences.
The conferences are currently dominated by union and state branch chosen delegates.
The factions could not agree what percentage of future conferences that component of rank-and-file delegates should be. A committee selected by the national executive, dominated by the unions, will decide how the selection will take place.
''This is one part of the way forward, it is not the whole,'' Ms Gillard said.
''The whole can only be done by making sure that each of us, with our respective responsibilities within our political party, embrace a culture of change, and I am incredibly optimistic we can do it.''
Senator Faulkner said the party was at a critical and dire point.
''The party is in decline,'' he said. ''Our membership is smaller and getting smaller. Our membership is old and getting older.''
The conference also endorsed Ms Gillard's push for a membership increase target of 8000 for next year, a trial of US-style primaries for some pre-selections - where non-members can vote on selecting candidates - and online membership participation in parties.
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