Already ensconced in a campaign to oust MP Stephen Jones from the federal seat of Throsby, Ms Hay turned her attention to Ms Watson on Friday, when Labor's influential Dapto branch passed a motion of no confidence in her.

Ms Hay is a member of the branch and her daughter, Alison Kelly, is the secretary.

Ms Kelly worked in Ms Watson's electorate office but her employment was terminated earlier this year.

The reasons why are now the subject of mediation by the NSW Parliament's human resources division.

Veteran Labor member Alf Whiddett moved the extraordinary no confidence motion during a snap branch meeting at Dapto's Dandaloo Hotel on Friday. Ms Hay was understood to have voted for the motion.

Ms Watson's supporters consider Friday's move revenge for Ms Kelly's termination and the start of a campaign to roll the Shellharbour MP at preselections in 2014.

The party's right faction, led by Ms Hay, is already working to overthrow Mr Jones at preselections later this year.

A possible preselection challenger is Ms Hay's Canberra-based military prosecutor son, Mark Hay.

Pressure is now growing on NSW Labor Party general secretary Sam Dastyari to step in and resolve the two disputes, but Mr Dastyari is unlikely to get involved unless a formal complaint is made.

"I think we need to move away from this culture of party officers in Sydney getting involved in the affairs of ALP members in the Illawarra region," Mr Dastyari said yesterday.

Friday's meeting was convened just a few days earlier to discuss "NSW conference issues and Dapto branch minutes".

The branch normally holds its meetings on Mondays.

The meeting was called at such short notice many members either couldn't make it or weren't concerned about missing it, given the administrative-sounding nature of the mooted topics.

Australian Workers' Union branch secretary Wayne Phillips, who last week called on Ms Hay to quit over her refusal to back Mr Jones, said the no confidence motion was "gobsmacking".

"What a hide, for Noreen Hay of all people, to talk about lack of confidence," Mr Phillips said.

"This is a woman who barely retained one of the party's safest seats just over a year ago.

"My union, along with others, has 100 per cent confidence in Anna Watson because she would run rings around anything Noreen has done or ever tried to do.

"This just confirms to me we will now need to take steps ... to have Noreen removed."

Ms Hay and Ms Watson were allies until Ms Kelly's termination.

Ms Watson once told the NSW Parliament she would "not forget [Ms Hay's] contribution and kindness".

"I appreciate your assistance more than you may ever know. I will continue to seek your counsel and I look forward to working with you," Ms Watson said last May.

Ms Watson refused to comment while Ms Hay did not return calls.

Ms Kelly could not be contacted.