Jeremy Corbyn, the new leader of Labour Party, greets supporters in London on Saturday.

Reuters/London

Karl Marx admirer Jeremy Corbyn was elected leader of Britain's opposition Labour party on Saturday, a victory that may make a British EU exit more likely and which one former Labour prime minister has said could leave their party unelectable.

Greeted by cheers from supporters in the room and hailed by radicals across Europe, Corbyn's triumph opened up the prospect of deep splits within Labour with some fearing he will repel voters with radical policies that include unilateral nuclear disarmament, nationalisation and wealth taxes.

"Things can and they will change," Corbyn, who when he entered the contest was a rank outsider, said in his acceptance speech after taking 59.5% of votes cast, winning by a far bigger margin than anyone had envisaged.

"I say thank you in advance to us all working together to achieve great victories, not just electorally for Labour, but emotionally for the whole of our society to show we don't have to be unequal, it doesn't have to be unfair, poverty isn't inevitable," the grey-haired, bearded 66-year-old said.

His victory reflects growing popular support for left-wing movements across Europe, with Syriza taking power in Greece and Spain's anti-austerity party Podemos performing well in opinion polls.

Corbyn's rise also has an echo of the way Senator Bernie Sanders has galvanised left-leaning Democrats in his bid to beat Hillary Clinton to the party's nomination for the US presedential race.

"Corbyn's victory as leader of the Labour party is great news, it's a step towards a change in Europe for the benefit of the people," Podemos leader Pablo Iglesias wrote on Twitter.

However, the scale of division Corbyn's victory has created in his own party was immediately laid bare with one Labour lawmaker quitting his role as a health spokesman while Corbyn was making his acceptance speech.

Others quickly followed, saying they would not serve in his senior team.

Labour swerving left

A vegetarian republican who only received backing from fellow Labour lawmakers to enter the contest to ensure wide debate, Corbyn has struck a chord with many Labour supporters by repudiating the pro-business consensus of Tony Blair, who won three elections for Labour but is now widely unpopular, not least because of his involvement in the invasion of Iraq.

Corbyn has offered wealth taxes and ambiguity about EU membership. He is a strong opponent of military strikes in Syria, meaning it would be harder for Prime Minister David Cameron to win parliamentary support to bomb Islamic State targets there.

"Going to war creates a legacy of bitterness and problems. Let us be a force for change in the world, a force for humanity in the world, a force for peace in the world," Corbyn said.

He also voted 'No' to Europe in a 1975 plebiscite and his success could make Britain's exit from the European Union more likely when Cameron holds an in/out referendum by 2017.

Corbyn defeated two former Labour ministers, Yvette Cooper and Andy Burnham, and Liz Kendall, regarded as the heir to Blair.

A parliamentary veteran of more than 30 years with a long history of voting against his own party, Corbyn triumphed on a message of promising to increase government investment though money-printing and renationalising vast swathes of the economy.

"Off the cliff?"

The prospect of a return to the party's socialist origins in commitment to partnership with trade unions and state ownership has drawn stark predictions it could be annihilated in 2020 national elections by a British public that in May re-elected Cameron for a second term on a promise to cut welfare spending.

"The party is walking eyes shut, arms outstretched over the cliff's edge to the jagged rocks below," said former centrist Labour prime minister Blair in a plea to voters to stop the Corbyn surge before the result was announced.

Some party members have even said Labour could split or that Corbyn would face a revolt by some of his lawmakers.

Neil Coyle, one of those who nominated Corbyn but actually supported his rival Cooper, queried his leadership potential.

"How is it that he's been in parliament since 1983, and yet he can't find 35 MPs (lawmakers) to put him on the ballot paper who genuinely think he'll do a good job?" Coyle told Reuters.

However, Ed Miliband who led the party to heavy defeat in May's election when Cameron won an unexpected overall majority, rejected Blair's prediction the party faced annihilation.

"He has a big job to do to seek to unite the party and I believe he does intend to do that," Miliband told reporters.

Labour suffered a particularly crushing defeat in Scotland where it lost all but one of its 41 seats to the anti-austerity Scottish National Party, which has also tapped into political disillusionment with Britain's established political class.