Former Liberal leader Lord Steel has told ITV News the party is in an "awful mess" over the Rennard row and it needs "to get a grip" of it.
Lord Rennard has threatened to take legal action after being suspended for refusing to apologise over sexual harassment allegations.
Nobody thinks Nick is the kind of guy who would defend a 'boy's club', but that does not necessarily mean he has handled the issue well.
A senior Lib Dem source has said that "obviously we disagree" with Lord Steel and that reinstating Lord Rennard "is not going to sort it out".
The former Liberal leader had told ITV News the party should lift the suspension on the former chief executive, who is accused of bringing the party into disrepute by refusing to apologise to women who complained about him.
The former Liberal leader Lord Steel has told ITV News the Liberal Democrat party has got itself in an "awful mess" over the Lord Rennard saga.
He said: "The first rule in politics is when you're in a hole, stop digging and the fact is they have been digging on both sides for the past two days."
Nick Clegg has just left "The Grey Room" on committee corridor where he's been meeting Lib Dem MPs & Lords about #Rennard fiasco
Clegg told his MPs the he stood by his decision to back the report which found #Rennard accusers were "credible" & demanded he apologise
Clegg thanks his MPs for their "measured tone" over #Rennard fiasco: "It's very difficult to confront the past and pursue a new culture"
The former Liberal leader Lord Steel has told ITV News that the party should lift the threat of expulsion hanging over Lord Rennard and the peer should withdraw any legal action.
He says the party leadership need to "get to grips" with the situation.
The former Liberal leader Lord Steel has called on the party to lift the threat of expulsion hanging over Lord Rennard.
He said the party had become obsessed with the allegations against its former chief executive, which was "very, very damaging".
He also appealed to Lord Rennard to drop his threat of legal action over a fresh inquiry into claims he'd brought the party into disrepute.
Lord Rennard is challenging Nick Clegg's attempt to have his conduct investigated in a second internal party inquiry.
ITV News understands the Liberal Democrat peer has hired a senior QC to try to get an injunction to stop the inquiry which was announced yesterday.
It is due to look into claims that he brought the party into disrepute by failing to apologise to women who complained about his behaviour.
Sources close to Lord Rennard said he had moved "heaven and earth" to try to get the matter resolved.
"Legal moves are expected within days," a spokesman said.
"We feel this second inquiry is a re-run of the first.
He is facing trial for the same charge - even though we have had two inquiries, one by the police, another by the Liberal Democrats and both concluded no further action should be taken."
Lord Ashdown has urged Lord Rennard to reflect on his approach to the complaints about him from women in the party.
In an interview with ITV News, he said: "I think there's a real change in climate, the way that people behaved in the past is no longer tolerable.
"Women now have taken power and are determined to ensure that whatever may have happened - without presuming guilt or innocence on anybody's part... these are new standards - and I am delighted and proud that, with great courage, Nick Clegg has stood up for those standards."
"That says a lot about the Liberal Democrats, it says a lot about him, it says a lot about the climate we need to be creating in politics."
Asked whether he thought Lord Rennard was behind the times, he said: "He's a man in a very difficult position and I think perhaps, somebody who has got a sense of human feeling for him and I do, who's a friend and admirer, will understand the difficult position he's in."
"I think he's been badly advised, I've told him that. I think he could have reacted better to this. I hope he'll understand that in the period ahead, that gives time for this to be able to happen."
One of the women who alleged she was harassed, refused to rule out taking legal action against the peer if he apologised.
Bridget Harris, who announced she would leave the Liberal Democrat party, told Newsnight: "I'm quite happy to accept on a personal level his apology if he is willing to take responsibility for his actions."
One of the women involved in the Lord Rennard case has spoken to the BBC and said that she felt she was being smeared after the peer said he had gathered 'devastating' evidence in to the claims.
Speaking anonymously the woman said:
It worries me that the latest statement from Lord Rennard sounds like it comes from the 1950s when woman in shorter skirts were considered to be asking for it.
Women are being victimised again by veiled threats that someone knows something about their past. I know there are things in my past that I'm not proud of but this is not relevant to this incident and it is unfair to drag more innocent victims in to this in a veiled attempt to discredit those who have spoken out.