Falkirk affair: Labour facing calls to apologise ED Miliband was facing a wave of fresh recriminations and infighting over Labour's handling of vote-rigging claims in Falkirk and the party's relationship with the unions on Saturday night. A day after the Labour leader dropped an investigation into claims that Unite, the country's largest union, had tried to rig the selection of a candidate in the seat, the party was plunged into fresh bloodletting as key union backers demanded an apology and a crackdown on Blairite figures in the party. Labour MP and key Unite backer Tom Watson demanded a retraction from shadow Defence Secretary Jim Murphy, after he accused Unite of having "overstepped the mark" in Falkirk. He also issued a thinly veiled criticism of Miliband who, in June, had accused Unite of "malpractice" in the seat. Speaking to Scotland on Sunday, Watson also claimed that it was not Unite but "other candidates" who were seeking to inflate their support in Falkirk in order to keep the left wing of the party out. However, there were also claims last night that Unite had only been exonerated because whistle-blowers in the Falkirk seat who had flagged up their actions had been "sat upon." Eric Joyce, the MP for Falkirk whose resignation from Labour sparked the fresh selection contest, compared the goings-on in the constituency to "what happens in Sicily." It leaves Miliband facing fresh party turmoil ahead of the TUC Conference this week, and the Labour Party conference in two weeks" time. The Tories last night declared that he had dumped the party's investigation under pressure from Unite. It comes amid fears in the party that the huge union could decide to pull much of its funding for Labour, after Miliband pledged - on the back of the Falkirk episode - to reform the party's links to unions. On Friday, the GMB union announced it was cutting funding to Labour by £1 million The two Unite-linked figures implicated, former candidate Karie Murphy and local party chair Stevie Deans, have now been reinstated. However, Murphy will not stand and is said to be feeling "bruised" over the allegations she has faced in recent weeks. Unite supporters last night launched an attack on their internal enemies, saying Labour's report had been based on inaccurate claims. Watson said the initial report which Labour drew up into the allegations had been "flawed" and "inaccurate" from the start. "Someone in the Labour Party owes Karie and Stevie Deans an apology," he added. He said that it was other candidates, not Karie Murphy, who had been signing up members ahead of selection for the seat. Watson said: "Since leaving the shadow cabinet, I have had the time to investigate the detail and it is clear that other candidates were involved in mass recruitment." His comments will point the finger towards another candidate in the seat, Gregor Poynton, the husband of Labour MP Gemma Doyle. One unsubstantiated claim is that the membership fees of 17 new members, backing Poynton, were all sent to the Labour Party's HQ in the same cheque. However, none of the allegations have been proven and no investigation has been launched by the party. Unite figures yesterday appeared to focus their attacks on Jim Murphy, the MP for Eastwood. In June, he hit out at the behaviour of the union. One Unite member, Brian Capaloff, a Labour Party official in Falkirk, tweeted: "Jim Murphy: You & your unfounded allegations are helping to severely damage Falkirk CLP & hand seat to SNP. Cheers. Meanwhile, other sources insisted that Unite had indeed been active in signing up supportive members to try to win the seat for its candidate. They said that the whistle-blowers in the seat had withdrawn their allegations "because they did not want to see Stevie Deans [the chair of the local Falkirk party, also suspended by Labour] lose his job." Falkirk MP Eric Joyce, who created the vacancy when he quit Labour after a Commons bar brawl last year, said that people had been "prevailed upon to take their evidence out." In my view they [Unite] stepped outside the rules and the evidence for that now seems to have been withdrawn by the key people, but I don't think that really leaves a credible result as far as anyone's concerned. The collapse of the Labour investigation will now prompt questions over Miliband's decision to reform Labour's union links - a decision taken in response to the allegations in Falkirk. Miliband wants union members to "opt in" to affiliating to the party rather than the present system of "opting out" if they do not wish to support it financially. Meanwhile, a spokesman for Unite said last night that no speedy decision would be taken on the question of its funding for Labour.