In the face of deep internal divisions on the issue, the party's ruling National Executive Committee urged the conference to delay taking a stance.
The AEEU engineering union had put forward a motion to Labour's conference in Blackpool calling for the first-past-the-post system to be retained.
Both factions in the debate had agreed all Labour members - including ministers - be allowed to speak their minds.
Party General Secretary Tom Sawyer said: "We are not seeking to kick this issue into the long grass. We are recognising the strength of feeling on this issue."
Renew democracy plea
Liberal Democrat peer Lord Jenkins, who has held an inquiry into alternative systems of voting, is due to issue a report later this month.
It is believed he will recommend the "alternative vote plus" system. Under the system, about 500 MPs are elected for constituencies.
They are then topped-up from a list of about 100 more MPs elected under proportional representation from a party list.
A heartfelt plea for reform came from Richard Burden, Birmingham Northfield MP and vice-chairman of the Labour Campaign for Electoral Reform.
He said there was an urgent need to renew and reinvigorate democracy.
"There's something wrong when we have the worst turnout since the 1930s," he said. "There's something wrong when too many young people don't think their votes count."
Parties ended up chasing a few hundred thousand votes in marginal seats.
"We need a system in which every vote in every seat counts equally," he said.
If there was a referendum, whichever way the result went, the party would have struck a blow for democracy, he said.
National Front warning
But more delegates spoke against reform than for it. Several of them put forward the argument that proportional representation would give undue influence to minor parties.
Mandy Buchanan, of Tyne Bridge, said: "If we had had PR on May 1 1997 we wouldn't have had a Tory-free zone in Scotland, we wouldn't have had a Tory-free zone in Wales and we wouldn't have only had one Tory MP in the north-east region.
"But not only would we have had Tories, we would have had Lib Dems, Socialist Labour, the Green Party, the Monster Raving Loony Party, worst of all the National Front."
Voter apathy would mean a PR system would still not be representative of the population, she said.
The government insists it will wait to see what the Jenkins report recommends before giving its own position on reform.
But Tony Blair said on Wednesday it was committed to a referendum.
Delegates voted to send the issue back to the Democracy and Citizenship Policy Commission for consideration.
Paddy as chancellor?
Ken Jackson, leader of the AEEU, declared: "We want a Labour Party debate - not a Liberal Democrat deal."
But he added: "PR cannot become Labour's EMU - a force for division, an excuse for open warfare."
Eastwood MP Jim Murphy wondered whether people wanted a system like that in Germany, where a coalition government led to "inefficient" government and wrangling over decisions.
"To tinker with the constitution in this massive way simply to please the Liberal Democrats, simply to pander to Paddy's personal ambitions does no service whatsoever to our party, our government and generations to come," he said.
Middlesborough MP Stuart Bell, Chairman of the First-Past-The-Post Group of Labour MPs. reminded delegates that Labour's massive majority had arisen under the current system.
And he described a scenario in which, under PR, Paddy Ashdown could speak to the Labour conference as chancellor one day, as deputy prime minister the next, then speak to the Tory conference the next day.
To loud applause, he appealed: "Let's have the debate but let's stay with first-past-the-post."