Bradford East MP David Ward will be hauled before Nick Clegg to face disciplinary action over comments he made about "the Jews". He 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 last month. The Lib Dem initially defended the comments but later apologised.