Labour’s former general secretary Iain McNicol has stepped down from the party’s frontbench in the House of Lords while an investigation is carried out into claims former senior officials sought to undermine Jeremy Corbyn’s leadership.

Lord McNicol was nominated for a peerage by Corbyn after resigning as general secretary in February 2018.

An 860-page report, which was leaked to Sky News at the weekend, includes lengthy extracts of private WhatsApp conversations between former senior Labour staff in which they are scathing about leftwing MPs and advisers – and Corbyn himself.

Its release risks reigniting factional tensions just as the new leader, Keir Starmer, seeks to underline the need for party unity.

The report includes allegations that some officials set up a secret project during the 2017 general election to funnel campaign funds to selected candidates’ seats, including that of the then deputy leader, Tom Watson – and were disappointed at the party’s unexpectedly strong performance.

And it suggests there was “abundant evidence of a hyper-factional atmosphere prevailing in party HQ in this period, which appears to have affected the expeditious and resolute handling of disciplinary complaints”.

McNicol is repeatedly mentioned in the report – and as general secretary, he oversaw Labour HQ. His decision to stand down as a Labour whip followed the announcement by Starmer of an independent investigation.

A spokesman for Labour in the Lords said: “Iain is stepping aside while the investigation is taking place.”

James Schneider, Corbyn’s former director of strategic communications, said the report was “shocking and clarifying”.

He went on: “It suggests that some of those most responsible for the failure to deal with antisemitism in the Labour party, which has frightened Jewish people and damaged the party, worked against the elected leadership and tried to shift the blame.

“There must be a reckoning for those who oversaw a system that allowed Holocaust deniers to remain in the party and deliberately undermined the chances of a Labour government.”

Len McCluskey, the general secretary of the Unite union, condemned the “rancid, and very cruel, political culture” exposed in the report, and called for former officials implicated to be suspended from the party.

Writing on the website LabourList, McCluskey called for the leaked report to be published in redacted form – and suggested some of the former officials named in the report should be suspended while investigations were carried out.

“Where there is clear evidence of a party member having engaged in misogynistic or abusive conduct, or having worked to undermine the party’s election campaign, or even having broken the law, there is a case for suspension pending a thorough investigation (with no presumption of guilt),” he said.

He added: “These politically crooked officials were prepared to risk dramatic damage to the interests of the British economy and working people just in order to scratch their factional itch.”

As well as apparently working to undermine Corbyn’s leadership, the report cites officials using a string of insults on private WhatsApp groups to describe leftwing MPs and officials in the then leader’s office.

Diane Abbott is referred to as “repulsive”, with another official saying she “literally makes me sick”. Corbyn’s senior adviser Seumas Milne is referred to as a “mentalist”, and Corbyn’s chief of staff, Karie Murphy, as “Medusa”, “crazy”, and a “bitch face cow”.

Jon Trickett, who was Corbyn’s election coordinator in 2017, said: “There are comments in there which it is hard to avoid the conclusion were racist and sexist.”

He added: “There are serious questions that are going to have to be answered. We have to have an explanation.”

The report appears to have been intended as a lengthy annexe to Labour’s submission to the Equality and Human Rights Commission – but after party lawyers decided it was not relevant, it was leaked.

It was completed this year in the final months of Corbyn’s leadership and its conclusions clash with claims by whistleblowers, formerly working for Labour, who told BBC Panorama last year there had been political interference in the process from the top of the party under Corbyn.

The EHRC is investigating Labour’s handling of antisemitism complaints.

Starmer and his deputy, Angela Rayner, announced on Monday that they had commissioned an independent review into the report’s content, and how it had found its way into the public domain.

Speaking about the report on Radio Four’s Today Programme, Starmer said he was “shocked by what I saw and the circumstances in which it all came about”

“That’s why I ordered an independent inquiry, which I want to be professionally done, independently done and quickly done because our party needs to unite and face the future and get back to our historic purpose which is getting a Labour government in so we can actually change lives for millions of people for the better.”

“We have to turn our back on factionalism and that was the whole basis of my leadership campaign,” he added. “I’m determined to do that.”

Some of the senior officials cited in the report said they were considering taking legal action about the fact it had been publicly released, saying it contradicted non-disclosure agreements signed when they left the party.

“Everyone’s consulting lawyers,” said one of those involved.

The Labour MP Clive Lewis, who is referred to in one message by a member of Labour staff as “the biggest cunt out of the lot”, urged Starmer to get to grips with the culture inside the party.

“We need to change the culture of our party, and that’s the challenge now for Keir and Angela,” he said. “For many members, who don’t see themselves as on the left or on the right, they will be thinking: ‘A plague on all your houses.’”

He added: “The leadership have a narrow path to tread on this. They will need to make sure that they are dealing with this in an even-handed way. If there’s any sense that there’s favouritism being shown to one side or another, then that will be problematic.”

The previous Labour leadership’s handling of allegations of antisemitism against party members overshadowed parts of the 2019 general election campaign. During a high-profile televised interview with Andrew Neil, Corbyn repeatedly declined to apologise to the British Jewish community for the way his party had handled complaints.