Ms Etemadzadeh claims that the 76-year-old "hugged me very tightly and rubbed his crotch on me" following an event at Essex University in 2014 and sent inappropriate text messages months later.
When the 27-year-old reported the alleged behaviour to the party she says she was left feeling "powerless and isolated" after she reported his alleged actions to the party, but it was "ignored".
"I felt powerless and isolated," Ms Etemadzadeh told ITV News.
"Not only did they ignore it, but a few months after it they promoted Kelvin Hopkins to the shadow cabinet and actually that made me feel very disillusioned in Corbyn's leadership."
In a statement, Mr Hopkins said: "I absolutely and categorically deny that I in any way engaged in any such inappropriate conduct.
"I simply put an arm around her shoulder to give her a brief, slight hug just before getting in to my car.
"I did not hold her tight. I did not rub any part of my body, let alone my crotch, against Ava.
"She waved me off as I drove away and did not say anything whatsoever to suggest that anything had occurred that upset her let alone revolted her."
Mr Hopkins claims that Ms Etemadzadeh sent him a text later that evening saying: "Thank you so much Kelvin for coming tonight!! We had a fantastic time. My members loved you! :-) You're a star! x Ava"
On Friday, Jeremy Corbyn came under fire for promoting an MP accused of harassment - Mr Hopkins.
The Labour leader declined to comment on the situation, but it is understood he only knew about one text message.
It is understood that Mr Hopkins was spoken to about why his behaviour was inappropriate and reprimanded by then chief whip Dame Rosie Winterton when Ms Etemadzadeh made her initial complaint after dealings with the MP in 2014 and 2015.
A complaint made to the leader's office in 2016 was based on the same information so no further action was taken.
Ms Etemadzadeh is understood to have given fresh information when she contacted the party about the allegations on Thursday, and Mr Hopkins has since been suspended while an investigation is carried out.
The activist said she contacted the whips' office after Mr Hopkins allegedly sent her a text message which read that she was "attractive, intelligent, charming and sweet natured.
"A nice young man would be lucky to have you as a girlfriend and lover.
"I am sure one such is soon to be found.
"Were I to be young... But I am not.
"Always your friend, and if you ever need a friend you have my number...xxx."
However, sources within the Labour Party claim that Mr Corbyn was warned about the appointment.
"I don't think that anyone who has these charges of harassment or sending inappropriate text messages to younger activists has a role on the frontbench of the Labour Party," Labour MP Jess Phillips told ITV News.
Mr Hopkins has been an MP for 20 years and has remained on the backbenches except for a four month stint as culture spokesman last year.
The allegations made against Mr Hopkins come as a string of MPs have been accused of inappropriate behaviour in a list which has reportedly been circulating at Westminster.
As well as apologising for his actions the 65-year-old acknowledged that what might have been acceptable in the past was no longer appropriate.
On Friday, Labour MP Clive Lewis denied an allegation that he groped a woman at the party's annual conference, saying the person who made the claim was either "lying" or "wrong".
The Labour Party said it is investigating after a formal complaint was made against the Norwich South MP.
Mr Lewis is alleged by the woman to have hugged her and given her backside "a big squeeze" at a conference event, it has been reported.
The MP said: "I know how I roll. I don't squeeze women's buttocks. They are lying or they are wrong."
Claims have also been made against Mrs May's de facto deputy prime minister Damian Green, which Cabinet Secretary Sir Jeremy Heywood is looking into.
It is claimed Mr Green "fleetingly" touched young activist Kate Maltby's knee during a meeting at a pub in 2015 and a year later sent her a "suggestive" text message.
Mr Green said any allegation that he made sexual advances to Ms Maltby was "untrue (and) deeply hurtful".
While former cabinet minister Stephen Crabb is accused of sending explicit texts to a 19-year-old.
In the wake of the allegations Labour has said they will bring in a specialist organisation to support victims of alleged harassment.
Labour's announcement comes after ITV News broke the news that their new procedure was criticised as not being independent enough.
Ms Bailey claims she was raped by a Labour member in 20111 and advised by a senior party official not to report it as it could have damaged her career.
As part of the code, the Tories are immediately adopting a new complaints procedure with a new hotline for reporting potential breaches and a more detailed process for investigation by a panel, which will for the first time include an independent member.