Labour has been pressurised into reopening applications for a safe seat after being accused of a “stitch-up” when the party suspended a leading candidate in the race just hours before a decision was due to be made.

Jas Athwal, the Labour leader of Redbridge council in east London, was axed from the contest to become the party’s Ilford South candidate at 11pm on Friday over disputed allegations that were first made against him in August.

It came 15 hours before a meeting to decide the candidate and left just two others in the contest, including Sam Tarry, who is one of the original organisers of Momentum and formerly served as director of Corbyn’s leadership campaign.

But after objections, Labour’s ruling national executive committee decided to reopen applications. The race to become the seat’s candidate began after former Labour MP Mike Gapes, who had been the incumbent since 1992, defected to the Independent Group for Change earlier this year.

Athwal said he denied the allegations, details of which have not been made public, providing evidence seven weeks ago that he claimed proved them to be false. The councillor said the party “chose to act late” by suspending him on the eve of the vote “when I had no time to challenge that decision”.

Jas Athwal (@Jas_Athwal) Please read my statement on the Ilford South Selection Process. https://t.co/eEI4D24nKX pic.twitter.com/YCm1ECAyac

Wes Streeting, the Labour MP for the neighbouring Ilford North constituency, thanked those who raised objections to what he described as an “undemocratic stitch-up”. He wrote: “Thank you to everyone raising objections to the undemocratic stitch up in Ilford South. It has forced a climbdown. Members have been able to vote to reopen the process. A victory for members against the machine!”

The Labour MP had earlier described the situation as “a new low” and called for the selection to be suspended.

Wes Streeting MP (@wesstreeting) I thought nothing could shock me about how the powers that be operate, but I was wrong. The Ilford South selection is a new low. Here is my statement on the suspension of the Leader of the Council 15 hours before the vote. The selection must be suspended until this is resolved. pic.twitter.com/EsJgBrs6mX

A Labour source dismissed the idea that the timing had anything to do with the selection process.

They said: “Anyone claiming this is a stitch-up is dismissing extremely serious allegations against this individual. This decision was taken by a panel following a report from an independent investigator from a specialist organisation. The case was anonymised so the panel did not know who the individual was.

“The timing has nothing to do with the selection process. Yesterday was the earliest opportunity for the case to be reviewed following the independent investigator’s report.”

In a statement posted on Twitter, Athwal said: “Untrue allegations were made against me on 13 August. I responded in detail to the Labour party on 20 August, with supporting evidence including witness statements, proving the allegations were untrue.

“No reply was received from the Labour party. Nothing was heard until late yesterday. My solicitor was emailed at 11pm, advising that I was suspended from the Labour party.

“This is not a fair process. It is contrary to natural justice. All I seek is a fair hearing and due process. The Labour party has had every opportunity to deal with this matter properly and fairly in the past seven weeks and chose only to act late yesterday by suspending me when I have no time to challenge that decision. This is why people are so upset.”

Earlier on Saturday, Tarry – who is a national political officer for the Transport Salaried Staffs’ Association – tweeted: “I am gutted that the selection process in Ilford South has been suspended today, but it’s absolutely the right thing to do. I am proud to have run a positive, people-powered campaign with hundreds of local supporters. I look forward to winning the vote when it comes back.”

In another tweet posted in response to Streeting, Tarry said: “There’s no winner in this,” adding: “If Jas hadn’t been suspended I’m confident I would have won today, and I look forward to mobilising such a huge, inspiring and positive campaign again.”

Commenting on the developments on Saturday morning, Gapes – who won 75% of the vote in the constituency in the 2017 election – wrote on Twitter: “I don’t know what is going on in Corbyn Labour. But I can assure all my Ilford South constituents that I am going on. And that I remain their member of parliament and will continue to represent them and fight for the interests of all our community.”

A Labour party spokesman said: “NEC officers have decided to reopen the applications to allow for other candidates to put their names forward.

“The meeting supported this course of action. The Labour party takes all complaints extremely seriously, which are investigated and any appropriate disciplinary action taken in line with the party’s rules and procedures. We can’t comment on individual cases.”