The battle lines were drawn after Mr Iemma declared he would continue with plans to sell elements of electricity infrastructure in defiance of a Labor Party policy adopted at the weekend.

In retaliation, Labor Party delegates endorsed a thinly veiled threat to pull support from Mr Iemma through the party's central committee.

On Saturday 800 delegates at the party's annual state conference voted 7-1 to reject the Government's electricity sell-off in an emotional and raucous debate in the Sydney Convention Centre.

But unhappy with the outcome, the Premier yesterday raised the stakes when he committed himself and the Government to continue with the power sale irrespective of what party members believe.

Illawarra MPs yesterday sided with the Premier and said the Government needed to secure electricity supplies. The move has set them on a collision course with regional union members who are staunchly opposed to the sale.

Kiama MP Matt Brown said he would not be bullied on the issue "by anyone".

"The Government needs to proceed with electricity reform to keep the lights on (and) I have every intention to continue talking with the union movement," he said.

Keira MP David Campbell, a staunch supporter of the Premier's plan, said he believed further consultation was needed.

In Saturday night's debate he said: "The Iemma government can't and will not allow the lights to go out in NSW (and) what we need to do as a government is to secure electricity supply."

Wollongong MP Noreen Hay said she supported further consultation.

"As a local Member of Parliament who is a staunch trade unionist I look forward to a resolution between the unions and Government that moves us forward in terms of maintaining supply which benefits the whole of the community," she said.

Shellharbour MP Lylea McMahon said the issue was a difficult one for the party but believed the Government needed to continue with the electricity sell-off.

"It's important that we all keep cool heads and we continue to talk," she said.

"I support the two pillars being proposed by the Premier, firstly that we continue to negotiate with the unions and second that we continue to secure the NSW energy supply."

But Illawarra union figures said the MPs should remember who elected them. "(They) need to be reminded they were elected under the banner of the Australian Labor Party and people of the Illawarra equally expect they all abide by the party's decision to reject privatisation," said NSW Unions deputy assistant secretary Chris Christodoulou.

South Coast Labour Council secretary Arthur Rorris said Illawarra MPs had a stark choice - follow the wishes of the people and the party or "follow the Treasurer and Mr Iemma into political oblivion".