The spoils of the new factional battle include a new federal seat that is due to be drawn up in Labor's heartland in Melbourne's west later this year, which both sides of the split have claimed for themselves.

The collapse of the nine-year-old "stability deal" between Labor's left and right factions comes at an awkward time for the Andrews government, which will not want its re-election pitch crowded out by internal scrapping as it prepares for a tight contest in November.

It also leaves Premier Daniel Andrews' faction, the Socialist Left, out in the cold.

It is unclear what consequences this will have for the Premier's internal authority.

A new deal was signed on Friday by right-wing factional leader and former Andrews government minister Adem Somyurek and several union chiefs, tearing up the old deal that had been overseen by long-time factional warlords Stephen Conroy and Kim Carr.

"The stability deal is dead, buried, cremated," one union secretary said.

Mr Somyurek's right faction and the unions who have signed on will have a stronger say in preselections now, although forces for the old stability deal insisted the new players did not yet have the numbers to control the party.

Under the old deal, every federal and state seat in Victoria is allocated to a faction, either the right or the left, ruling out some would-be candidates who had strong support among local party members.

The authors of the new right-left factional agreement argue the old deal has alienated the party's rank and file members, because it has given them too little say in preselections of new candidates.

"This has resulted over the years of its operation in too much emphasis on prescribed power sharing rather than policy, proportionality or local democracy," the new agreement states.

"This has often worked against the recruitment and retention of Labor members and our ability to develop robust, election-winning policies with talented candidates."

One of the deal's signatories put it more bluntly on Friday: "Little Rocket Man [Kim Jong-un] in North Korea has stability but at what expense? Democracy."

The new grouping has called itself the Centre Unity and Industrial Left Alliance.

The deal has also been driven by five left-aligned unions who have recently split from the Socialist Left, the militant CFMEU, the Maritime Union of Australia, the Finance Sector Union, the Rail, Tram and Bus Union and the Health and Community Services Union.

Three right-aligned unions also agreed to sign on to the new deal on Friday: the Australian Workers Union, which is linked with Opposition Leader Bill Shorten, the Plumbing Trade Employees Union and the Transport Workers Union.

Three other right-aligned unions, the Shop Distributive and Allied Employees Association, the National Union of Workers and the Health Services Union, have not yet joined the alliance.

However, the new deal's proponents insist that they will and that in any case, after today they have the internal majority required to exert control over preselections and cast off the old left-right carve-up of Labor seats.

The agreement states the new alliance will work to re-elect the Andrews government and to make Mr Shorten prime minister.

But it has not been backed by all in the Victorian ALP, with elements of the Right still aligned to former Senator Stephen Conroy, and the Socialist Left faction, which includes Mr Andrews, firmly opposed.

Its opponents say the majority of the party is against the breakaway agreement because it is "fundamentally aggressive".

"There's no appetite for war," one senior member of the left said on Friday. "Bill [Shorten] can't afford it and Daniel Andrews certainly can't afford it.

"Here we are, fighting a byelection and we've got people running around trying to think of the ways to neck people."

Victoria's left faction sensationally split up two months ago when Brunswick MP Jane Garrett, who was the Industrial Left's preferred candidate for a vacant spot in the Victorian upper house, missed out to Ingrid Stitt, the Socialist Left's pick, despite winning the local vote.

These two halves of the Labor left appear destined to clash again over control of the new federal seat that will be created in Melbourne's north-west, as Victoria gains an extra seat due to its rapid population growth.

A copy of the old stability deal, obtained by The Age, specifies that the Socialist Left will preselect the candidate for this seat ahead of the likely 2019 federal election.

"Centre Unity commits to support the Socialist Left should a redistribution create either a new additional safe, or a new additional marginal federal seat for Labor on updated boundaries," the old deal states.

This seemingly puts Labor's factional powerbrokers in conflict, as the new deal also states explicitly that the new seat will go to a candidate chosen by the Industrial Left.