Rennard had been suspended following his refusal to apologise over allegations of inappropriate behaviour towards women

Nick Clegg was facing a row on Tuesday night after the Liberal Democrats decided to re-admit Lord Rennard – the man who masterminded the party's byelection victories in the 1990s – as it dropped disciplinary proceedings relating to allegations of inappropriate behaviour towards women.

Susan Gaszczak, a Lib Dem activist who made one of the allegations about Rennard and who resigned from the party last month over its handling of the matter, said: "The party democracy obviously has no moral compass. They say we are credible, then fail to act on it and don't see the impact this has on women and women voters."

Bridget Harris, another woman who complained about Rennard's alleged behaviour, told ITV News she was "very disappointed" by the decision.

Nick Clegg showed his deep anger at the damage inflicted on the party and the deep distress caused to the women when he said the matter had caused the Lib Dems to take a "long, hard look in the mirror".

In a statement issued while on holiday in Spain, the deputy prime minister said the party would now change the way it dealt with such allegations. The current criminal burden of proof used by the party is likely to be changed to make it easy to take disciplinary action.

Clegg said: "The Liberal Democrats have taken a long, hard look in the mirror since these allegations were made last year and I am confident that the party has changed.

"It is clear that a number of women in our party felt let down that the party failed to act on their complaints appropriately. I am determined that no member of our party should find themselves in that position again.

"That's why I immediately appointed Helena Morrissey to carry out a root-and-branch review of our culture and processes and made sure we acted on her recommendations.

"In addition, at my request the party president and the federal executive established a review into our procedures for handling cases such as this to ensure that the party's rules are fit for purpose in the future. This review has now been completed by a senior barrister who has recommended that we make changes to the current criminal burden of proof and these changes will now be taken forward."

On Tuesday night the party announced the decision by the regional parties committee not to press ahead with proceedings about Rennard. It had been examining whether he brought the party into disrepute over statements made by himself and his supporters.

The Lib Dems also faced criticism after releasing the decision at 8.30pm. The Lib Dem spokesperson said: "The regional parties committee met this week to consider whether the party had been brought into disrepute by statements made by Lord Rennard, or on his behalf, following the publication of Alistair Webster's conclusions. It decided not to proceed with the disciplinary process against him. This brings the matter to a close and means the suspension of his membership is lifted."

The investigation was launched after four women alleged that Rennard touched them inappropriately. An inquiry by Alistair Webster QC, commissioned by the party, concluded there was insufficient evidence that Rennard had acted in a sexually inappropriate manner. Webster suggested that Rennard might "reflect upon the effect his behaviour has had and the distress which it caused and that an apology would be appropriate".

Rennard declined to apologise, prompting the decision to suspend him for potentially bringing the party into disrepute. The party announced last month that it was dropping the investigation into whether his failure to apologise had brought the party into disrepute. The decision on Tuesday night was related to the investigation into whether he had brought the party into disrepute over his alleged "criticisms of party processes".

Tim Farron, the party president, made clear that the party had learned a lesson. He said: "The Liberal Democrats have worked hard in the last 18 months to fundamentally change the way our party treats these matters. We asked Helena Morrissey to review our party's culture and practices and her report helped us to recognise our failings and set about correcting them.

"We have changed our rules and codes of conduct at every level, from grassroots members to parliamentarians so that everyone involved in the party is aware of their rights and responsibilities. We have changed how complaints are reported and addressed, and we have appointed a pastoral care officer to help and advise those making a complaint.

"No one should ever have to feel that their concerns are being dismissed or ignored and I am clear that the Liberal Democrats should become the 'gold standard' for how voluntary organisations treat their members and staff."

Gloria De Piero MP, Labour's shadow minister for women and equalities, responding to the lifting of Lord Rennard's suspension, said: "Nick Clegg has sent a clear message to women voters – he is more interested in trying to salvage the Lib Dems' fading election hopes than do the right thing by the women who made these serious complaints. Yet again he has failed to show any kind of leadership."