Johann Lamont's shake-up of her party will also include the reintroduction of "twinning" first-the-past-post seats on a gender basis in a bid get more female candidates elected to the Parliament.
However, one senior party source said the reforms were a "damp squib and tweaking at the edges".
Last year's election defeat to the SNP prompted a root-and-branch review of the party's structure and operations north of the Border.
A new post of Scottish Labour leader was created, while radical changes on policy and candidate selection were also promised.
Labour's rule book prevents so-called dual candidacies, the practice whereby candidates can stand in first-past-the-post races and on the regional list.
The only way round the "ban" is if the party's Scottish Executive Committee (SEC) grants permission, as it did for a small number of MSPs at the last Holyrood poll.
Supporters of the status quo believe dual candidacies encourage careerism and make it more difficult for younger candidates to break through.
However, the catastrophe of the last election has prompted a rethink.
Some of Labour's most able politicians, such as former ministers Andy Kerr and Tom McCabe, lost their constituency seats without having a back-up place on the list.
The net result, according to one insider, was that experienced MSPs were kicked out and replaced by "dross".
Supporters of change also believe the policy puts Labour at a disadvantage, as the SNP, Liberal Democrats and Tories all allow dual candidacies.
A Labour SEC away day earlier this month agreed to scrap the ban and the policy will now go through the formal ratification process.
On gender balance, Scottish Labour used a twinning mechanism for the 1999 Holyrood election but this later lapsed after it was seen to have achieved its goal.
By 2003, 56% of Labour's Holyrood intake was female, but this figure has fallen substantially since then.
This slippage has prompted the party to reintroduce twinning for constituency selections in the 2016 Holyrood poll.
Seats will be "paired", with members having to select a man in one seat and a woman in the other.
The party has also agreed to set up a training academy for candidates.
However, a senior party source said the reforms did not go far enough, adding that sitting MSPs had a vested interest in protecting their own jobs.
Anas Sarwar, deputy Scottish Labour leader, said: "The Scottish Labour Party is changing, and we have pledged to open up our structures to reconnect with the people we seek to represent.
"As part of this process we have reviewed our selection procedures so we can offer Scotland the best possible choice of candidates.
"By allowing our candidates and MSPs to stand on the list and in constituencies at the same time, we are placing power back into the hands of our members to ensure they get the candidates that will best represent their communities.
"Scottish Labour led the way on equal representation in the first Scottish Parliament in 1999 and by moving to twin constituencies again on a gender basis we hope to create a Labour group which better reflects the society we live in."
SNP MSP Aileen McLeod said: "It doesn't matter what Labour tries to do with its selection procedures as the people of Scotland will judge the party on its policies.
"Johann Lamont's Cuts Commisssion threatens key services including prescriptions, higher education, apprenticeships and the council-tax freeze – all policies which people really care about."