Experts say the race is too close to call, largely due to Labour's voting system that offers ballots not only to legislators and party activists, but to about 3.5 million labor union members.
Ex-foreign secretary David Miliband, 45, is pitted against younger brother Ed Miliband, the 40-year-old former climate change secretary. Both seek to restore the party's fortunes after a humbling national election defeat against Prime Minister David Cameron's Conservatives.
The sparring siblings are frontrunners in a five-strong field of candidates, and offer sharply contrasting views on the future of their center-left party, dumped after 13 years in the aftermath of the global financial crisis and a biting 18-month long recession.
The elder Miliband — once gushingly praised by US
Secretary of State Hillary Clinton as "vibrant, vital, attractive (and) smart" — advocates sticking largely by the centrist policies of his mentor Blair, believing Labour must woo back middle class moderates to return to power.
His brother, a protege of Blair's rival Gordon Brown, has set out plans that resonate with Labour's rank-and-file, particularly its leftist labor union backers, advocating a rise in Britain's minimum wage, higher taxes for top earners and a more punishing levy on banks.
Legislators appear to favor the elder brother, while labor unions back the younger Miliband — and the party's 160,000 ordinary members seem divided. Votes have already been cast, with the result announced Saturday on the eve of the party's annual rally.
"There's been an element of soap opera, of a family battle, about all of this," said Lance Prince, a former press adviser to Blair and co-author of a forthcoming biography of both brothers. A "real tension was introduced into the relationship between them and it became very, very difficult," he said.
In contrast to Brown's unopposed coronation in 2007, current contenders have crisscrossed Britain to spar in more than 40 town hall-style debates — skirmishes which have seen the Milibands pull away from their rivals.
The other candidates are the pugnacious former education secretary Ed Balls, amiable ex-health secretary Andy Burnham, and wild card Diane Abbott, a veteran leftist who opposed the 2003 invasion of Iraq.
David Miliband has acknowledged that competing with his brother has been "pretty odd — it's an unusual situation," but insists they remain close.
"We're a relatively small family, and one of the things you learn in small families is you stick together, and we are determined to make sure that family comes before politics," he told Associated Press Television News in an interview.
The brothers were raised by their late father Ralph and mother Marion, both prominent leftist intellectuals and the children of Polish-Jewish parents, in a north London home bustling with activism.
But the elder Miliband conceded that — despite a shared upbringing — he and his brother have sometimes wildly different approaches on policy. "We were brought up to think for ourselves — and haven't I learned that in the last few months," he said drily.
As the older brother gained prominence as foreign secretary in Brown's Cabinet, Ed Miliband quietly carved out his own international reputation. The younger politician won plaudits for his work to strike a global emissions pact at the Copenhagen climate conference in December, dashing from his bed to scupper a 4 a.m. attempt by Sudan to veto an agreement.
"Ed has that special ingredient. He is somebody who offers real change, whereas David has appeared more trapped in the past," said Peter Hain, a Cabinet minister under both Blair and Brown.
However, critics say Ed Miliband has gone too far in appeasing his party's left wing, by suggesting the use of more tax hikes and fewer spending cuts to clear Britain's national debts, a move that would safeguard jobs of Labour loyalists in Britain's public sector.
In turn, David Miliband is accused of favoring a familiar pro-business agenda over any radical overhaul of the platform adopted in the failed campaign to stave off Cameron's Conservatives at the national election.
"There's been an important distinction during the campaign, with David Miliband saying we have to think of the voters, we have to think of the people we need to win back in order to secure power again, while Ed Miliband has been talking more to the party — tickling the tummy of the party — in order to win the leadership," said Price.
Whichever brother wins, they face immediate challenges.
A first major speech to the party's rally is scheduled Tuesday, and in less than a month they must offer a sharp response as Treasury chief George Osborne announces public spending cuts aimed at saving 30 billion pounds ($44 billion) per year.
Osborne's five-year austerity plan is the centerpiece of Cameron's program for government — and likely to heavily influence the outcome of the next national election, due in 2015.
After Brown's dour election performances, including a gaffe in which he insulted an elderly female voter, activists will also look to the new leader to display a surer touch in dealing with the public But Price said there's no evidence either Miliband has the confidence or charisma that made Blair a success. "I think they both actually have a bit of a problem of appearing to be slightly out of touch with ordinary folk," he said.
