Kevin Rudd's radical plan to shake up the way the Labor leader is chosen could erode the power of the voting public, prime ministerial hopeful Clive Palmer says.
Under Mr Rudd's proposal announced on Monday, the federal leader would be jointly elected by the caucus and party members, with each group having 50 per cent of the vote.
This would take away the power of a factional few to chose the leader, the newly re-installed prime minister said, prompting Opposition Leader Tony Abbott to accuse Mr Rudd of simply protecting his job.
Mr Palmer also criticised the proposal, saying it could lead to a deadlock.
Worse still, it was also possible a leader could be elected with only one caucus member backing them.
The party member vote would dilute the influence of publicly-elected parliamentarians, he said.
"The Australian people would be disenfranchised because they've only got the opportunity to vote for the candidates at the election," he told AAP.
"The Labor party only represents less than one per cent of the vote and you can't have a situation where their influence is more proportionate than their electors.
"It's a major flaw.
"You could have someone whose voted for himself and stood for Labor members, and all the opposition as well as his own members didn't want him."
Mr Palmer said Mr Rudd's proposal was "stupid" and a ploy to look good.
"Kevin wants to get popular so he'll pretend he's doing all this knowing that the unions won't let him do it, so people think 'Kev, you've had a go, we think you're a good guy, trying to make it more democratic for the Labor members'."
The proposed changes and Labor's election strategy will be considered at a special caucus meeting on July 22.