Brighton and Hove's Labour Party risks losing thousands of pounds of funding unless it topples its embattled leader within weeks.

GMB, the general workers' union, has threatened to withdraw campaign contributions from the party in the run-up to the next local election in 2007 unless Ken Bodfish is replaced as leader of Brighton and Hove City Council.

The union, whose 4,000 members make it the largest in the city, gave a substantial donation to the party to help it contest the last ballot in 2003. The money came from local and national funds.

But the GMB leadership said it felt betrayed by Coun Bodfish's hard line approach to the teaching assistants' dispute earlier this year.

And it is unhappy with the leader's support for city academy schools and the transfer of the council's housing stock to a not-for-profit organisation.

At the last election, Labour failed to win an overall majority and was forced to run the council as a minority administration.

Yesterday, the union refused to comment on its funding plans. But a source close to its Brighton and Hove leadership said: "The issue has got to be brought to a head and the boil lanced."

Coun Bodfish, who has been a trade union member for 40 years, said: "It's absolutely outrageous for a trade union to interfere in political matters in this way."

Alex Knutson, secretary of Unison's Brighton and Hove branch, said: "We do not want to live in the brave new Labour future Ken is suggesting."

Yesterday, a third Labour councillor called for Coun Bodfish to step down. Francis Tonks, who represents Moulsecoomb and Bevendean, said: "It is time to speak out for Labour values."

On Monday, The Argus reported that Coun Bodfish, who has led Brighton and Hove City Council since 2000, had lost the confidence of at least four Labour colleagues. Councillors Kevin Allen and Jack Hazelgrove have also called for him to go.