New Zealand has shown how to choose a new electoral system in a more democratic manner. In 1992 the people of New Zealand were asked (a) if they want a change then (b) which of four electoral systems they would prefer! The systems considered were: Mixed Member Proportional, Supplementary Member, Single Transferable Vote, or Preferential Voting. This resulted in 70.3% voting for Mixed Member Proportional according to this report.
In one way the ConDem (and Labour manifesto) proposal to hold a referendum on the electoral system is a step forward because the right of a people to decide on matters of constitution is implicitly acknowledged. But the sophistication of the ConDem referendum plans (AV or bust) is far removed from the New Zealand process.
Thanks to INIREF for their contribution to this post.