Ninety Labour MPs and peers have criticised the decision to let MP Chris Williamson back into the party.
They expressed “hurt and anger” at Mr Williamson’s readmission and questioned the fairness of the process.
Mr Williamson, MP for Derby North, was suspended in February following remarks he made about the party’s handling of anti-Semitism.
A Labour source said Mr Williamson had been found to have breached party rules and given a formal sanction.
They said he could face further action if he repeats any similar behaviour.