In a move that could have serious implications for the Democratic party's electoral machine, four of the country's largest unions said they would boycott the annual convention of the AFL-CIO (American Federation of Labour-Congress of Industrial Organisations) in Chicago yesterday to form the Change to Win coalition.

The dissident unions say the national leadership should concentrate on stemming the decline in union membership, which has fallen from more than 30% of private-sector workers when the AFL-CIO was formed 50 years ago to about 8% today.

They want greater devolution of funding and the merging of unions into larger organisations that can take on global giants such as Wal-Mart.

The schism is of broader political significance because of the huge amount of money and manpower the unions contribute to the Democratic party at election time.

Critics say the split will weaken the union movement by undermining solidarity at a crucial time when the Republican party has launched attacks on working families.

"If the AFL-CIO splits the fear is at least that the entire labour union movement will be less powerful than it is today - and that's not very powerful," said Robert Reich, the labour secretary under former president Bill Clinton.

Those who support the split say that under its present leadership the AFL-CIO is united in the wrong direction.

"We are not trying to divide the labour movement, we are trying to rebuild it," said Andy Stern, president of the service employees union SEIU, which is leading the split.

The other unions involved are the Teamsters, and those representing hotel, textile, commercial and food workers. Those supporting the current leadership tend to be in older industrial unions that have weathered the brunt of globalisation.

The rift has dominated the run-up to the national convention in Chicago, which was supposed to celebrate the AFL-CIO's 50th anniversary and re-elect its leader, John Sweeney.

In a pre-convention rally Mr Sweeney said he had conceded the main demands of the dissidents, who he said were driven by ego not principle.

"It's a shame for working people that, before the first vote has been cast, four unions have decided that if they can't win they won't show up for the game," said Mr Sweeney.

The rhetoric was particularly rancorous because Mr Stern was a protege of Mr Sweeney.