Total funding for the Labour Party in the year to June 2013 was £16.8 million, which £4.2 million came from trade unions, figures released by the party show.
Former home secretary Alan Johnson - an ex-union leader - warned against "petty retribution" in the wake of Ed Miliband's party reform pledge.
"We can no longer go on living the lie with these millions of people signed up as levy-paying members to the Labour Party, and treated as if they were members," Mr Johnson told BBC Radio 4's The World At One.
"I call them the ghosts in the machine. That is bad for the party, it is bad for the trade unions."
The former Communication Workers Union chief added, "I just hope this is not a piece of petty retribution by a trade union."
A senior Labour source said the party had been given "more than a few hours" notice of the GMB's decision to reduce its funding, and was not aware of any other unions planning similar moves.
Labour leader Ed Miliband will not be deterred from his plans to "mend not end" Labour's financial links with the unions, the unnamed source added.
A Conservative Party spokesman said: "Nothing has changed. The union barons can still rig Labour's candidate selections, buy Labour's policies and pick Labour's leader.
"If Ed Miliband is too weak to stand up to his union bosses, he will be too weak to stand up for hardworking people."
Labour's former General Election co-ordinator Tom Watson has pledged to "fight very hard" to retain the party's links with trade unions after the GMB union announced it was slashing its funding.
Mr Watson, who was involved in the selection of Labour's election candidates, resigned his shadow cabinet position over the Falkirk row.
He wrote on his blog: "If this is the beginning of the end of that historic link, it is a very serious development that threatens a pillar of our democracy that has endured for over one hundred years.
"Some will scoff but they are fools to do so. That party card stands for something more than confirmation that an annual direct debit has been processed."
Shadow Treasury secretary Rachel Reeves said she was "confident" more trade union members would sign up to the party when automatic affiliation is stopped.
"Of course we welcome the support that we get from the trade unions but this is a decision for the GMB," she told BBC Radio 4's Today.
"Since the last general election, membership in my constituency party in Leeds West has increased by 50 per cent. We've got more members, more trade union activists getting involved in the party because they like what Ed Miliband has to say.
"So I am confident that more people will sign up, get involved in the Labour Party, and come out campaigning. But that openness and transparency is really important and that is what Ed is trying to do."
The GMB union is to reduce its spending on Labour Party campaigns and initiatives. It comes as the union announced it was to cut its affiliation funds in the wake of the row over party reforms.
The decision follows plans by Ed Miliband to give individual union members the choice of opting to join the party rather than being automatically affiliated. The union has affiliated 420,000 of its members to Labour but that figure will be cut to 50,000 from January.
GMB CEC expressed considerable regret about the apparent lack of understanding the proposal mooted by Ed Miliband will have on the collective nature of trade union engagement with the Labour Party.
A further source of considerable regret to the CEC is that the party that had been formed to represent the interest of working people in this country intends to end collective engagement of trade unions in the party they helped to form.
The CEC also decided to scale down by one third the level of its national political fund.
The GMB union is to cut its affiliation funds to Labour from £1.2 million to £150,000 in the wake of the row over party reforms, the union has announced.
The GMB union's general secretary has criticised the language used by some within the Labour Party about trade unions, claiming it was "very disappointing and insulting".
Paul Kenny predicted just 10% of GMB members affiliated to the Labour Party would retain that status under the new system proposed by Ed Miliband.
Mr Kenny told BBC Radio 4's Today programme: "I anticipate we will now have to ballot our members so that we can comply with what Ed wants.
"I think we will be lucky if 10% of our current affiliation levels say yes they want to be members of the Labour Party, because they are two different things - campaigning for issues with the Labour Party and being members of the Labour Party are two entirely different things".
Mr Kenny added: "We have been trying to encourage our members to join the Labour Party for a very long time, in our magazines, in meetings, at our conferences. I have to say we have not been knocked down in the rush".
Most people travel to work by car, showing how hard household budgets have been hit by rising fuel costs, according to a new report.
A study by the GMB union showed that two thirds of workers in England and Wales travelled by car, as a driver or passenger, almost 20% by public transport and one in 10 walked.
Separate figures for Northern Ireland showed that over four out of five people used a motor vehicle to get to work.
The GMB report, published ahead of the union's annual conference in Plymouth tomorrow, noted that the price of unleaded petrol and diesel had almost doubled over the past decade.
General secretary Paul Kenny said: "These figures demonstrate why the massive hike in the price of fuel and of public transport has hit workers very hard. It is no wonder household budgets have taken a hammering."
A union is taking legal action to seek compensation on behalf of workers it claims were blacklisted by one of the UK's biggest firms.
The GMB accused services giant Carillion of blacklisting hundreds of UK workers. The union published a report which it said pulled back the "curtain of secrecy".
It revealed the way firms like Carillion denied workers employment rights. Many workers were unaware that they had been blacklisted by companies, says the report. The GMB said it had instructed a law firm to seek compensation for its blacklisted members.
Paul Kenny, general secretary of the GMB, said: "This report pulls back the curtain of secrecy to give a glimpse as to the way employers like Carillion have illegally used their power and money to blacklist citizens and to deny them their rights to employment."