Ed Miliband's policy director Jon Cruddas indicated over the weekend the idea was under consideration as the Opposition draws up its detailed policies to take to the country in 2015.
A Labour pledge to put Britain's European Union membership to a public vote would heap further pressure on Prime Minister David Cameron as he seeks to placate eurosceptic backbenchers.
The PM gave his strongest hint yet last week he could consider a poll after the general election, saying there would be a chance for the people to give "fresh consent".
However, Lord Kinnock urged Labour activists at a party conference fringe event to argue strongly the case against Labour also promising to open the ballot boxes on the issue.
He said: "We are resistant to a referendum because it would be a gigantic distraction, it would disable political and economic activity in the rest of the European Union and the only real beneficiaries of the whole exercise would be the masters of propaganda.
"In these circumstances we are right to counsel the British people that there are many answers to the woes that afflict them and many answers to building a stronger fairer future.
"Having a referendum to resolve a mortal dispute within the Tory party is not one of them."
Mr Cruddas said in a newspaper interview: "It's something we will be looking at in depth in the policy. At some stage there is going to have to be some resolution of what our relationship is here and what format that takes. It could be a referendum."