Bradford East MP David Ward will be hauled before Nick Clegg to face disciplinary action over comments he made about "the Jews".
The Liberal Democrat MP was summoned to meet chief whip Alistair Carmichael on Monday night but must now defend his actions to the party leader.
Lib Dems said there would be "further meetings as part of a disciplinary process" but refused to be drawn on whether that could result in Mr Ward being kicked out of the party. The row first blew up over a posting made by Mr Ward after signing a memorial book to mark Holocaust Memorial Day.
He wrote that he was "saddened that the Jews, who suffered unbelievable levels of persecution during the Holocaust, could within a few years of liberation from the death camps be inflicting atrocities on Palestinians in the new state of Israel and continue to do so on a daily basis".
The Lib Dem initially defended the comments but later apologised.
Bradford MP David Ward has welcomed a decision by the Office of Fair Trading to refer the car insurance market to the Competition Commission.
Mr Ward carried out his own investigation into the industry last summer in response to high premiums in his Bradford East Constituency. He has since led a campaign to bring premiums down and has lobbied the Government to take action to address what he calls 'bad practice' in the insurance trade.