The Co-op said it had secured "resounding endorsement" for reform after a vote by members paved the way for radical changes in the way it is run.
Delegates at a meeting in Manchester unanimously backed a motion calling for elected board directors and greater powers for individual members.
The mutual, which last year racked up a £2.5 billion loss following the worst period in its 150-year history, said a board meeting would now take place before the end of this month to formulate a timetable for reform.
Lord Myners, whose recent report on the Co-op provided the basis for today's four-point resolution, said he hoped the vote was a "turning point" for the food-to-funerals group.
He had previously warned that the Co-op, which has around eight million members and a 90,000-strong workforce, faced a bleak future unless it took urgent steps to replace its current "dysfunctional" board structure.
Lord Myners proposed a ''plc and beyond'' structure which replaces the existing 20-strong board of representatives from the co-operative movement with professionally-trained directors.
Having met an initially hostile response from some parts of the movement, Lord Myners said today's vote in favour of reform had exceeded his expectations.
Ursula Lidbetter, Co-operative Group chair, described the outcome of the ballot as "a highly significant moment" and said members had made clear their commitment to far-reaching reform of governance.
She said: "Our members have given us a resounding endorsement for reform. We will begin immediately."
Ms Lidbetter went on: "Reading the mood of our members today, they have recognised that we need to modernise, we need to move on.
"There is an absolute change of tone. People are now ready to make this change now."
Today's ballot involved representatives of the Co-op's independent societies and affiliated organisations - who hold 22% of the vote - and others voting on behalf of its regional membership boards making up the remaining 78%.
Detailed reforms involving rule changes will still have to be voted on at a later date and will require two-thirds support.
The four-point resolution called for:
The creation of a board of directors ''qualified to lead an organisation of the size and complexity of the Co-operative Group''.
Establishment of a separate structure which will give the group's eight million members powers to hold the board to account for the performance of the business and ''adherence to co-operative values and principles''.
A move to the concept of ''one member one vote'', but with ''appropriate representation'' for the Co-op's independent societies.
Rules to protect against any ending of the group's mutual status.
He said: "We have some good businesses capable of much better performance than we have seen and whilst that will be a journey it is one I think that is entirely achievable for us."
Mr Pennycook outlined the group's "new purpose", which will see any profits go back to the communities where its members live and work.
He added: "They won't be pulled down to the City of London or to Wall Street. They stay in the communities where those profits are generated."
The Co-op's huge losses mainly stemmed from the near-collapse of its banking arm, which had a £1.5 billion hole in its balance sheet following the ill-fated takeover of the Britannia building society.
A damning report by Sir Christopher Kelly into the bank's woes also found that the wider group had badly let down its millions of members by its failure to provide ''proper stewardship'' of the business.
It has now seen its stake in the bank fall from 100% to around 20% after bondholders including US hedge funds took up the majority of shares as part of a rescue plan.
Lord Myners, who has now stepped down from the Co-op board after he was appointed a director of the group in December, said it was apparent from the first time he attended a board meeting that not one of its members had the ability to address the complex issues faced by a group with £1.4 billion of debt.
He warned that the Co-op would have to sell assets such as its £1 billion funeral care business in order to meet the demands of its lending banks.
The former Marks & Spencer chairman said today: "The resolution that they have approved is a very carefully worded one in which every word counts, and the resolution reflects the core pillars or principles of my report on governance.
"So they are not voting on my report but they are voting to support the direction of travel which I have suggested so I am very pleased with the outcome of today.
"I think it is a turning point for The Co-operative."
He added: "I am very confident that there will be substantial change in the governance of the Co-op and the leadership of the organisation will have a strong and more accountable board.
"My proposals involve the board being subject to a degree of scrutiny which goes well beyond the scrutiny of a plc board. It is plc 'plus' in that sense and it also has deeply embedded democratic principles of one member one vote."