The Liberal Democrats have apologised to Lord Rennard for mishandling part of his disciplinary process and dropped their investigation into whether he brought the party into disrepute by refusing to say sorry to female activists who accused him of inappropriate sexual behaviour.

The peer and former chief executive is now being investigated only over whether his "criticisms of party processes" on social media and in the press have harmed the reputation of the Lib Dems, which means he continues to be suspended from the party in the House of Lords.

A Lib Dem spokesman stressed that the apology was not a formal one.

Friends of Rennard are hopeful the peer will be able to return to the party and are treating the downgraded investigation as a positive development, although he could still face expulsion over the complaints about attacks on party processes.

In a fresh concession, a senior Lib Dem official apologised to Rennard over the fact the party told the media an appeal against his suspension had been rejected before the peer himself was informed of the ruling. At a meeting this week of Lib Dem peers, among whom Rennard still has strong support, the party agreed that Lord Wallace of Tankerness would investigate how the leak had occurred.

At the time, a friend of Rennard told the BBC the "shocking and mischievous" leak was "in total defiance of fair process" and had caused great distress to the peer.

The latest development was met with astonishment by Susan Gaszczak, one of the activists who made a complaint about Rennard's alleged advances but who left the party last month in protest at the Lib Dems' handling of the matter.

Gaszczak, who is setting up a charity called Surviving Sexual Harassment, said Rennard should not be trying to "paint himself as the victim" and criticised the Lib Dems for having such a "convoluted disciplinary process".

Arguing that many were still not taking the matter seriously enough, she said she had heard of a Lib Dem peer complaining that the party was "falling apart because Rennard's not there to strategise".

The partial climbdown on the scope of the investigation is the latest twist in a 17-month battle between Rennard, the party and his four accusers, who maintain he touched them inappropriately.

An inquiry by Alistair Webster QC into the women's claims found they were credible but concluded there was not sufficient evidence that Rennard had acted in a sexually inappropriate way sufficient to bring any disciplinary charges. He did, however, raise the possibility that the peer might "reflect upon the effect that his behaviour has had and the distress which it caused and that an apology would be appropriate".

Rennard's refusal to do so led to his suspension for potentially bringing the party into disrepute.

Rennard, who has always denied touching the women inappropriately, finally said in May this year – 15 months after the original claims – he was sorry if he had inadvertently encroached on the women's personal space.

The Lib Dems have now decided there is no longer any reason to continue the investigation into this issue of the apology, especially as he had initially not been allowed to see the full Webster report about his conduct for 11 weeks. However, the suspension was upheld over his "criticism of party processes".

Rennard has been informed by a disciplinary body of Lib Dems, the English regional parties committee, that the investigation of him is now on the basis of "Mmedia and social media comments made by you, endorsed by you and made on your behalf that have attacked the party and the party processes publicly since the announcement of the Webster report results".

The committee said some complainants thought the party's reputation had been "publicly damaged by the response to the Webster report going further than was necessary to respond in the public domain".

A spokesman for Rennard said the peer considered disciplinary action on the basis of "public criticism of party processes" to be a threat to the party's core principles, including free speech. He added that every party leader Rennard has worked with over several decades has been critical of party processes and pointed out the peer has given no media interviews in the past 17 months.

A Lib Dem spokesman confirmed the party was no longer investigating Rennard's failure to apologise. Some Lib Dem parliamentarians have privately expressed fears the party could suffer at the election because of the suspension of Rennard, a campaigning expert.

The Lib Dem Rock the Boat campaign group against sexual harassment has said it remains concerned there are "still those in our party who refuse to understand how damaging these episodes have been".

In a letter to the Guardian, the group wrote: "Fundamental to the electoral success of the party in recent years was the perception that we are decent people who generally do the right thing. Agree or disagree with us, people tended to like us.

"Senior party members continue to underestimate the damage to that perception of the Rennard scandal itself, the party's reluctance to tackle it in a timely manner, and ongoing refusal to understand that abuse of power for self-gratification is wrong. It is particularly wrong for an organisation that campaigns against sexual harassment and the abuse of power. That perception among activists or indeed voters will not be restored by campaign wizardry or ignoring the problem, but by dealing with it."