More than 150 Labour MPs and peers have criticised the decision to readmit MP Chris Williamson into the party.
They expressed "hurt and anger" at the ruling and said Jeremy Corbyn must withdraw the party whip.
The Derby North MP was suspended after saying Labour had "given too much ground" in the face of criticism over anti-Semitism in the party.
Eleven frontbenchers, including deputy leader Tom Watson, are among those criticising the ruling.
A statement signed by 160 Labour parliamentarians says that, as Labour is being investigated by the Equality and Human Rights Commission over allegations of anti-Semitism, the case is "particularly important".
They criticise the process by which Mr Williamson was allowed back into the party, adding: "It is clear to us that the Labour Party's disciplinary process remains mired by the appearance of political interference. This must stop."
They call on Mr Corbyn to "show leadership" by asking for this "damaging decision to be overturned and reviewed".
Mr Watson told the BBC he was "bewildered by the decision" to readmit Mr Williamson.
"They have taken away a proper disciplinary inquiry that would have got to the facts of this case," he said.
Meanwhile, one member of the panel that ruled on the case, MP Keith Vaz, has written to the party's general secretary Jennie Formby, saying that details of Mr Williamson's case were "selective leaked" to the media.
All cases dealt with on that day should be reconsidered in order to protect the integrity of the process, he added.
Labour MP Caroline Flint also said Mr Williamson should not have been readmitted.
"He seems to have gone out of his way to support people who have been expelled from the Labour Party for anti-Semitism," she told the BBC's Question Time.
Jon Lansman, chair of the Labour grassroots group Momentum, said Mr Williamson "has to go" and tweeted that the MP had shown "not one iota of contrition nor any acknowledgement of wrongdoing".
Separately more than 70 Labour staff members have signed a letter to the party's general secretary Jennie Formby to express their dismay at the decision.
But, speaking before the publication of the letters, Mr Corbyn said he had not been involved in the decision to readmit Mr Williamson.
"It was an independent panel set up through [Labour's ruling body] the National Executive. They examined the case, they decided to let him back in, albeit with a reprimand."
"Anyone that makes anti-Semitic remarks can expect at the very least to be reprimanded and if they are very serious and engaged in anti-Semitic activity then they will be expelled from the party," he said.
Who is Chris Williamson?
- The 62-year-old is one of the most outspoken MPs on the left of the party
- A former bricklayer and social worker, he was a councillor before entering Parliament
- Led Derby Council twice in the 2000s, where he formed a coalition with the Tories
- Elected as MP for Derby North in 2010
- Lost the seat in 2015 but won it back two years later
- Has called on critics of Jeremy Corbyn to be de-selected
Mr Williamson was readmitted to Labour on Wednesday, following his suspension in February.
He was suspended following publication of footage showing Mr Williamson telling activists Labour had been "too apologetic" over anti-Semitism and was being "demonised as a racist, bigoted party".
He later said he "deeply" regretted the remarks and did not want anyone to think he was "minimising the cancer of anti-Semitism".
After his readmission, he told BBC Radio Derby: "Anybody who knows me, who knows my record, knows I'm someone who has stood up against bigotry throughout my political life and indeed beforehand."
The Equalities and Human Rights Commission confirmed in May it would be launching a probe into whether Labour had "unlawfully discriminated against, harassed or victimised people because they are Jewish".