Labour peer Lord Ahmed has been suspended by the party after apparently claiming a Jewish conspiracy was responsible for his imprisonment for causing a fatal car crash.
He allegedly made the comments in an television interview in Pakistan in April last year.
The Times obtained a recording of the interview and reported his comments, in which Lord Ahmed is said to have claimed Jewish media owners pressured the courts to give him a severe punishment.
A Labour spokesman said: "The Labour Party deplores and does not tolerate any sort of racism or antisemitism.
"Following reports in the Times today we are suspending Lord Ahmed pending an investigation."
It is claimed that in the interview, conducted in Urdu, Lord Ahmed said Mr Justice Wilkie was appointed to sentence him at Sheffield Crown Court in 2009 in order to help a "Jewish colleague" of Tony Blair.
The peer suggested the supposed Jewish plot had followed his support for Palestinians in Gaza.
He was jailed for 12 weeks after admitting sending text messages shortly before a motorway crash which killed another driver.
In the interview uncovered by the Times Lord Ahmed reportedly said: “My case became more critical because I went to Gaza to support Palestinians. My Jewish friends who own newspapers and TV channels opposed this.”
Shortly before he was jailed, Lord Ahmed had claimed that university societies in this country had recruited young British Jews to join the Israeli army and fight in Operation Cast Lead. He said the Jewish students should be prosecuted for war crimes on their return to this country.
He was also suspended by Labour last year for allegedly offering a £10 million bounty for US President Barack Obama. The suspension was lifted following an investigation into comments he made in a Pakistani newspaper.
Lord Ahmed has not commented on his latest suspension.
Labour MP Louise Ellman, chair of the Jewish Labour Movement and vice-chair of Labour Friends of Israel, said: "I'm appalled. If true, these comments reflect basic antisemitism and I welcome the Labour Party's decision to suspend Lord Ahmed.
"It's important that investigations are carried out as soon as possible."
The peer is a trustee of the Joseph Interfaith Foundation, which promotes Muslim-Jewish relations. Mehri Niknam, its director, said: "Serious allegations have been made against Lord Ahmed, which the Labour party is currently investigating. If the allegations are proven to have been true, then Lord Ahmed will resign."
Board of Deputies chief executive Jon Benjamin said: “We are appalled by Lord Ahmed's alleged comments which recall the worst Jewish conspiracy theories.
"However outlandish and incredible his allegations, there will always be gullible or malicious individuals or groups that will accept what he has said and add to the growth of antisemitic discourse.
"If Lord Ahmed is found to have indeed made the reported comments, he should be expelled from the Labour Party, as such views should have no space in responsible political discourse.”
