The decision to prevent Aberdeen Labour going into coalition with the Conservatives was made with a casting vote by chairman Alex Rowley MSP, the Press and Journal understands.
Aberdeen Labour councillors were overwhelmingly – eight votes to one – in favour of the deal to keep the SNP in opposition.
But they have been forced to consider quitting the party after their decision was overruled by the national executive.
Now the Press and Journal can reveal it was Scottish Labour deputy leader Mr Rowley, known for his hard left views, who is behind the decision and not party leader Kezia Dugdale.
Aberdeen Conservatives had signed up to a deal with Aberdeen Labour, including anti-austerity measures and no compulsory redundancies.
The power-sharing deal appears to meet the demands of the Scottish Executive Committee (SEC) that no deal should be struck that would result in further austerity being imposed on local communities.
And Aberdeen Labour has already worked in coalition with Aberdeen Conservatives for the last five years.
It is understood the feeling on the SEC panel was so strong they were left deadlocked on whether to approve the deal.
This is where Mr Rowley, Mid-Scotland and Fife MSP, stepped in to use his casting vote against the deal.
It is understood up to eight Labour councillors look set to quit the party, leaving the official Aberdeen Labour party with just one councillor.