Jeremy Corbyn has been forced to suspend his close ally Ken Livingstone for making inflammatory remarks about Hitler and Zionism, after facing a revolt among Labour MPs about antisemitism within the party.

With just a week to go before crucial elections, Labour was engulfed in a row over Livingstone’s future and wider concerns that a series of scandals involving antisemitism was damaging its reputation.

It was the second time in two days that Labour has had to take action over complaints of antisemitism. The Bradford West MP Naz Shah was suspended over Facebook posts from 2014, including one suggesting Israelis be deported to the US.

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In defending Shah, Livingstone intensified the row by claiming Hitler had supported Zionism “before he went mad and ended up killing 6 million Jews” and claimed there was a “well-orchestrated campaign by the Israel lobby to smear anybody who criticises Israel policy as antisemitic”.

The former London mayor then went on the BBC’s Daily Politics to express his concern about a blurring of antisemitism with criticism of Israel, and defend his comments about Hitler as “historical fact”.

His comments provoked such anger within the party that John Mann, an MP and campaigner against antisemitism, accosted Livingstone in a stairwell at the BBC. Their encounter was filmed as Mann branded Livingstone a Nazi apologist, told him he had “lost it” and that he needed help over the “factually wrong, racist remarks”. Within the hour, Livingstone had been suspended.

Corbyn denied there was any crisis in the party over antisemitism and suggested that those inflaming the situation were out to undermine his leadership because they were “nervous of the strength of the Labour party at local level”.

“It’s not a crisis. There’s no crisis,” Corbyn said. “Where there is any racism in the party it will be dealt with and rooted out. I have been an anti-racist campaigner all my life.”

Asked whether the party had a problem with antisemitism, Corbyn said: “No, there is not a problem. We are totally opposed to antisemitism in any form within the party. The very small number of cases that have been brought to our attention have been dealt with swiftly and immediately, and they will be.”

However, a string of MPs and peers said the party was at a tipping point and should no longer be minimising the scale of antisemitic views promoted by some of its politicians and members.

Sadiq Khan, Labour’s London mayoral candidate, was one of the first to call for Livingstone to be suspended, saying the comments were “appalling and offensive”. Later, the shadow cabinet ministers Chris Bryant and Seema Malhotra joined those demanding his expulsion. Jon Lansman, a founder of Momentum who helped to run Corbyn’s leadership campaign, said it was time Livingstone left politics altogether.

Some MPs were angry that Mann was disciplined by the party’s chief whip, Rosie Winterton over his public confrontation with Livingstone. But during hours of fraught discussions about how to handle the furore, some within Corbyn’s team argued for Mann to be suspended as well. It is understood that some at the top of Labour viewed his intervention as part of a pattern of hostile and abusive behaviour towards the leadership.

Winterton made it clear to Mann that it was unacceptable to engage in public arguments. However, a number of Labour MPs supported his position against Livingstone.

Wes Streeting said: “John spoke for many of us within the party when he confronted Ken Livingstone. Frankly, if we as a party had listened to John a long time ago about Ken Livingstone we would have taken action before now … I was furious this morning and I still am angry.

“I don’t know how I would have reacted if I had seen Ken. I think John Mann, like many of us, is sick and tired of the flat-footed and woeful response of the Labour party in tackling antisemitism within our own ranks.”

Although Livingstone has sometimes infuriated the Labour leadership with his controversial comments and unscheduled appearances on the airwaves, he is an old ally of Corbyn, who said it was a sad day.

The decision to suspend Livingstone and carry out a party investigation into his comments was taken while Corbyn was campaigning in Grimsby, Lincolnshire. Aides held talks and phone conferences, while consulting with the leader during breaks in his visits to see students and lay a wreath for International Workers’ Memorial Day.

After hours of debate, it was decided that Livingstone’s comments were not necessarily antisemitic but highly inflammatory and insensitive, so the reason given for the suspension was for bringing the party into disrepute.

There is some anxiety at the top of the party that the row about antisemitism should not be allowed to shut down debate about a resolution to the Israel-Palestine conflict – an issue on which Corbyn has campaigned for many decades. At the same time, supporters of Corbyn fear that the issue of antisemitism is being used to undermine his leadership.

Livingstone’s future is expected to be decided by a party disciplinary sub-committee, after recommendations from officials about whether he should be expelled or given another chance. A member of the national executive committee and chair of the international policy commission, Livingstone was expelled in 2000 after standing as an independent candidate for the London mayoralty, but was later readmitted.

He still has a number of allies who will fight to keep him in the party. However, there is likely to be external and internal pressure for Livingstone to be permanently excluded.

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Karen Pollock, chief executive of the Holocaust Educational Trust, said: “Those who invoke the Holocaust to score political points should be loudly and roundly condemned – this is not the first time that Ken Livingstone has chucked the Holocaust around like political confetti and it will probably not be the last. But to be clear, the deliberate misuse of the history of the Holocaust is antisemitism – pure and simple.”

Rabbi Danny Rich, chief executive of Liberal Judaism and a longtime Labour member, said: “If anyone has gone mad, it is Ken Livingstone. His comments get more offensive and unworthy every time he is interviewed.

“Claiming Hitler was a Zionist is not only a huge historical perversion, but it directly equates Nazism and Zionism. It suggests they share objectives and values; it is guilt by association. It is hard to think of a more offensive linkage.

“Suspending him from the Labour party is not the end of the matter. Livingstone is a symptom, not the cause. I am nervous that by focusing on one large personality, we are not dealing with the issues which led him to make such a statement.

“The first step is to admit you have an institutional problem and then to set out strategies to deal with that. Antisemitism in British politics is quite simply unacceptable, from whatever quarter it may come.”

• This article was amended on 29 April 2016. Because of an editing error, an earlier version gave the year that Ken Livingstone was expelled from Labour as 2010.