The Sunday Times reports the “party within a party” framework will be based on the Socialist Campaign Group of MPs, which counts Mr Corbyn as a member.
According to the paper, the rebels will look to sign up more than 100 MPs to join the Co-operative party, Labour’s sister party, and sit on the green benches as “double hatted” MPs.
The group will appoint their own whips in parliament to co-ordinate rebellions where they disagree with Mr Corbyn’s policy and look to change the rules to appoint an elected Shadow Cabinet, as previously called for by the party’s deputy leader Tom Watson.
It will draw up policies on areas including Brexit and national security, the Sunday Times reports.
The rebels apparently prefer the creation of a new group on Labour benches to forming a breakaway party.
They argue Mr Corbyn and Shadow Chancellor John McDonnell, both members of the Socialist Campaign Group of MPs, would struggle to criticise the move after they voted against the Labour leadership from the backbenches when in power.
“Corbyn voted against the leadership more than 500 times,” said one rebel leader.
“We’ve only done it a dozen times. We’re just getting started. There will be a new grouping within the PLP a lot like Corbyn and McDonnell had. We will stick together for mutual support. We will have our own approach on the economy and Brexit and national security.”
The Co-operative party has held an electoral agreement with Labour since 1927 that allows them to stand joint candidates in elections.
MPs Stella Creasy, Jonathan Ashworth, Gareth Thomas, John Woodcock and Louise Ellman are among the 25 Labour MPs also to be members of the Co-operative party.
“Some MPs for the sake of their own sanity want some formal way of organising,” a Labour source said. “The Co-op is established as an official entity and could be used as a means of doing that.”
The Co-operative party is recognised by the Electoral Commission.
Speaker John Bercow has said if he is to recognise a different official opposition, the party must be registered with the Electoral Commission.
The rebels believe that the move could help protect from threats of de-selection, as Co-Op-Labour MPs could apply to become the official opposition if they command more seats than Mr Corbyn.
Elsewhere Tory MP Andrew Bridgen claimed Labour MPs who expect Mr Corbyn to retain the leadership have been urging the Tories to call a general election.
“I’ve had very senior Labour MPs come to me and they have begged me to push for an early general election to finish Corbyn off. They say, ‘Put us out of our misery. It would be a mercy killing,’” he told the Sunday Times.
“The Conservative party should play politics like chess while Labour get on with their unending game of lots of snakes and no ladders.”