Labor strategists say they are moving to replace Morris Iemma, fearing the party will be wiped out at the next state election if he stays on as NSW Premier.
Senior Labor sources told The Weekend Australian that Mr Iemma cannot last in his job after disastrous Newspoll results last month and no sign of change from the Premier's "do nothing" approach.
They confirmed the NSW ALP has commissioned internal polling to gauge public support for candidates including Deputy Premier John Watkins, Emergency Services Minister Nathan Rees and former education minister Carmel Tebbutt.
Mr Iemma is standing firm in the belief his party has no alternative to him. But senior ALP figures were adamant, saying: "We will find one."
The leadership threat came as Mr Iemma inflamed tensions with his party machine by avoiding a meeting of its chief decision-making body in Sydney.
The ALP's NSW administrative committee passed a resolution declaring extreme disappointment that the Premier had snubbed an invitation to discuss why he wanted to privatise the state's electricity industry, despite losing a 702-107 party conference vote in May.
"This is a sad sign of the deteriorating relationship between the party and the parliamentary leadership since the state conference," said the resolution.
In a final effort to find compromise, the committee invited Mr Iemma to next month's meeting, even offering to move the date if it was inconvenient.
A spokesman for Mr Iemma said the Premier would consider the resolution. He also dismissed any suggestion Mr Iemma might step aside, saying there was "no chance, none whatsoever" that the Premier would quit before the March 2011 election.
The paper says disenchantment with Mr Iemma has reached the most senior levels of the party, to the point where even strong supporters who backed him to replace Bob Carr as premier in 2005 accept a change is necessary.
A Newspoll commissioned for The Australian last month deeply disturbed Labor officials after it showed the NSW party's primary vote had sunk to 28 per cent and Opposition Leader Barry O'Farrell was preferred premier for the first time on 39-32 per cent.
A senior party source said: "We are facing a bigger swing than in 1988. There is no way the NSW branch is going to sit by and get wiped out. The next election is going to be hard to win but we are going to give it a shot."
