His remarks came a day after Shivpal threatened to resign alleging rampant corruption in the Uttar Pradesh government headed by Mulayam's son Akhilesh Yadav. Assembly polls in UP are due next year.
At a flag-hoisting programme on the occasion of Independence Day, Mulayam said that a conpiracy was being hatched against Shivpal within SP and if he leaves the party, it will get divided into factions.
He said he had read media reports that Shivpal while expressing concern over touts and musclemen calling the shots in the state, had threatened to resign.
"Shivpal is working very hard. A few people are against him. If he quits, then the situation for the party will become bad. Half of the people will go with him," the SP supremo said.
As some party leaders attempted to prevent the issue from being talked about in the presence of the media, he said, "How does it matter? An issue that is true is true."
SP state president and UP Chief Minister Akhilesh Yadav was present on the occasion.
While expressing concern over "land-grabbing", Shivpal, who was in Mainpuri, had spoken about his resignation.
He had alleged some party workers and office-bearers were involved in "wrongful acts" of "land-grabbing and harassment of the public".
"MLAs and MLCs involved in such activities will be expelled from SP. Those party workers and office-bearers involved in land grabbing and acts of deceit will be expelled," Shivpal had said yesterday.
He had said, "Government staff at police stations and tehsils are not paying heed to public grievances. SP had to face defamation because of those involved in land-grabbing and illegal acts."
Shivpal had later said in an statement that SP would not allow people to be harassed even if it requires him to resign.
"Samajwadi Party will never allow harassment of the public...Iske liye chahe mujhe istifa kyun na dena pade (for this I am even prepared to resign)...Those involved in harassment of the people have no connection with SP," he said.
Mulayam said that from next month, he would hold rallies in 18 divisions.