The Federal government will introduce legislation to parliament paving the way for a potential split in the CFMEU, which could further fuel tensions between Labor and some of the union's vocal top brass.
The move comes a week after CFMEU Victorian secretary John Setka launched a campaign against the AFL, criticising the league for hiring the former boss of the now defunct building watchdog as its head of umpiring.
It also follows demands from Independent senator Jacqui Lambie earlier this year for the government and the Greens to support female members of the CFMEU, and allow them to vote to hive off their branches of the union over concerns around attitudes to women.
The bill will give members of the CFMEU's manufacturing division the power to break away, if a ballot of members backs such a proposal.
Workplace Relations Minister Tony Burke said it afforded manufacturing division members the same opportunity provided to the union's former mining division, which voted to demerge under legislation passed by the previous Coalition government.
"We will provide the opportunity for members of the manufacturing division to vote on their future, because the status quo is dysfunctional and cannot continue," Mr Burke said in a statement.
"Our laws will do what the Coalition's previous laws should have.
"The members in the manufacturing decision include workers in largely feminised industries like textiles — and it's not hard to see why those members might want to vote to leave."
The behaviour of some CFMEU officials, particularly Mr Setka, has caused significant concern for the union and Labor.
In 2019 then federal opposition leader Anthony Albanese tore up Mr Setka's membership of the Labor party after a series of scandals, including regarding his alleged behaviour towards women.
Mr Setka insisted he had resigned, and was not expelled.
The federal opposition had accused the prime minister of being weak in his response to the latest saga fuelled by Mr Setka, and had promised its own bill to break up the CFMEU prior to news of Labor's plans being revealed on Tuesday night.
"These members of the manufacturing division are mostly women and they have wanted out of the CFMEU for a long time," Shadow Workplace Relations Minister Michaelia Cash said.
"I've met with them in the past and they were very clear, they said that they were sick and tired of being associated with the actions of the militant members of the construction division of the CFMEU and in particular John Setka.
"It is now time to stand up for the vulnerable workers of the manufacturing divisions of the CFMEU and allow them to get out of this militant union — they should not have to wait another minute."
Senator Cash insisted that if Labor was honest in its criticism of Mr Setka and the CFMEU, it would not accept donations from the union.