Baroness Tonge has questioned the right of Jews to emigrate to Israel and described her "dream" of Palestinian refugees being able to "march to their homeland".
"I have a dream just like Martin Luther King… There could be hundreds of thousands if not millions of Palestinians marching to change their homeland. You can't kill them all, you can't kill them all," the Liberal Democrat peer told an audience in Parliament on Monday.
She said she hoped "one day, without violence, without taking up arms, without any suicide bombers, Palestinian refugees from Lebanon, Syria, Jordan, from western countries, from Iraq, from all over the Middle East, will march on Palestine and they will go and they will exercise their right of return.
"If they were unarmed and doing it peacefully what could the international community do? I do have that dream, and one day I know it's going to be achieved."
Veteran Jewish anti-Zionist MP Sir Gerald Kaufman, chairing the World Refugee Day event organised by the Palestinian Return Centre, added: "That's a dream which we all want to come true."
Baroness Tonge warned that there would be "no Israel in the long term future" if the issue of Palestinians' right of return was not solved.
She asked why "the right of return for Jewish people going to Israel" was rarely raised and said "an Eastern European who may be Jewish" would be able to "go to a settlement, go to the West Bank, on Palestinian land, and live there" without anyone questioning it.
The "Israel lobby" was blocking the Palestinian cause, she said.
"The power that lobby has on the US government, we saw it with Netanyahu's Congress speech… Until we can convince the Israel lobbyists that it is in Israel's own interest that they solve this problem in the long term there is going to be no future for Israel if this situation goes on. America is going to stop being chief country one day. Empires don't last for ever, they fade away."
Before making her comments, Baroness Tonge said: "Can I welcome whoever it is in this room from the Jewish Chronicle who is waiting for some choice little titbit to make into a huge scandal to try to get me sacked from my party. Welcome."