Labour has dropped its disciplinary investigation into Margaret Hodge after she called Jeremy Corbyn "racist" and "anti-Semitic".

In a major climbdown by the embattled Labour leader, he has bowed to pressure from senior Labour MPs and close allies and backed down.

A Labour leadership source told Sky News the investigation had been dropped after she apologised to Chief Whip Nick Brown for the manner of her comments, but not the content.

In a series of posts on Twitter, Dame Margaret - who lost family members in the Holocaust - disputed that version of events, declaring: "Just to be clear: there have been no apologies - on either side."

She also tweeted: "I'm pleased that the Labour Party has finally dropped their 'action' against me. After 55 years of Labour Party membership, going after me instead of addressing the issue was wrong.


"In 2018 anti-Semitism has again reared its ugly head and the campaign against it goes on."

Image: The full letter from Margaret Hodge's lawyer after the investigation was dropped

And she added: "The Labour Party must adopt the International Holocaust Remembrance Alliance definition in full to start to rebuild trust."

But Dame Margaret remains bitter at the way the investigation has been handled and after the announcement that it had been dropped her lawyers Mishcon de Reya fired off an angry letter to Ms Formby.

"As you are aware, our client will not apologise for her conduct or words, as she did nothing wrong," the letter said.

"You have entirely misrepresented our client's discussions with the Opposition Chief Whip in a cynical attempt to save face in your necessary climbdown.

"We also note that media reports have suggested that our client has sent the Chief Whip a letter confirming her expression of regret. This is false, and raises yet further concerns that you continue to brief the media in different (and false) terms to those set out in correspondence to our client."

Image: Dame Margaret allegedly rowed Jeremy Corbyn over anti-Semitism

Mr Corbyn's climbdown comes less than 48 hours after Labour's deputy leader, Tom Watson, demanded an end to the investigation and warned that the party faced "eternal shame" over anti-Semitism.

But Labour has so far not dropped a separate investigation into another senior MP, Ian Austin, who complained to party chairman Ian Lavery that under Mr Corbyn the party had become "a sewer".

The row between Dame Margaret and Mr Corbyn which led to the disciplinary move against the veteran MP took place in the Commons chamber during a series of Brexit votes on July 17.

Watson: Labour faces 'eternal shame' over anti-Semitism

Earlier that day Labour's ruling national executive enraged many of the party's MPs by refusing to back the full IRHA definition of anti-Semitism.

It was also the meeting at which veteran left-wing activist Peter Willsman unleashed his emotional rant on anti-Semitism, which was secretly recorded and later published by the Jewish Chronicle.

Shortly after her clash with Mr Corbyn, Dame Margaret received a letter from Labour's general secretary, Corbyn-supporter Jennie Formby, telling her she faced disciplinary action.

The move sparked an outcry from Labour MPs and led to angry exchanges of letters between Dame Margaret's lawyers, Mishcon de Reya, and the general secretary.

Image: Tom Watson challenged Jeremy Corbyn to clamp down on anti-Semitism

It is understood that in a meeting with Dame Margaret, the chief whip told her whatever her differences with Mr Corbyn she could not make a scene in front of other MPs behind the Speaker's chair.

Mr Brown then issued Dame Margaret with a written reprimand and it is understood he took the view that since the row happened in Parliament it should be dealt with in Parliament and left at that.

Later, aware of the damage the row was inflicting on the party, Mr Corbyn's closest ally John McDonnell told Sophy Ridge on Sky News the party should "move on".

"I've worked with Margaret over the years," Mr McDonnell said. "I was the chief exec of an organisation that she was chair of for over 10 years [the Association of London Authorities]. She's got a good heart.

Image: Ian Austin is still facing his investigation

"Sometimes you can express anger - I'm one of these people who has in the past - and basically you have to accept that sometimes people can be quite heated in their expressions. Let's understand that and just move on."

Besides speaking out, Mr McDonnell is understood to have urged Mr Corbyn privately to drop the investigation, fearing it was drowning out Labour's message on key policies during the summer months.

Responding to the decision, Gideon Falter, chairman of Campaign Against Antisemitism, said dropping the investigation was a "humiliating capitulation" by Mr Corbyn.

"The entire Jewish community was disgusted by the way that Dame Margaret was victimised simply for confronting anti-Semitism in the Labour Party, which is one of the reasons why we referred the party to the Equality and Human Rights Commission," he said.

"We applaud her for standing up against anti-Semitism in the Party and for refusing to bow to the considerable pressure put on her to apologise.

"The Labour Party's humiliating capitulation just shows how disgraceful their action was, especially considering that Peter Willsman has faced no action over his appalling tirade in front of Labour's entire National Executive Committee.

"The party must now apologise to Dame Margaret. We remain convinced that Dame Margaret was right to call Jeremy Corbyn an 'anti-Semite' and that under his leadership the Labour Party has become institutionally anti-Semitic and an existential threat to British Jewry."

Mr Corbyn is also understood to be preparing a partial climbdown on the issue of the anti-Semitism definition by accepting three of the internationally recognised definitions the national executive previously rejected.

But the move has been condemned as inadequate by Jewish groups, since Mr Corbyn is reported to be unwilling to move on demands to accept that defining Israel as a "racist endeavour" is anti-Semitic.