One of Labour’s biggest private donors has said he no longer feels “any affinity or connection” with the party, and accuses its leadership of failing in its response to “the most blatant acts of antisemitism”.

As Labour struggles to quell a renewed outcry over the issue, Sir David Garrard, who has donated about £1.5m since 2003, said the party he had supported “no longer exists”. Despite funding Labour under three leaders before Jeremy Corbyn’s election to the post, he had now left the party, he revealed. He told the Observer that he had watched the current handling of the issue with “growing dismay and foreboding”.

His intervention comes as one of Corbyn’s allies quit a senior party post on Saturday night, after being criticised for apparently defending a Labour member accused of Holocaust denial. Christine Shawcroft had already resigned as the head of Labour’s disputes panel after it emerged she sent an email defending the Peterborough council candidate Alan Bull after he was linked to a series of antisemitic social media posts.

She later said she was “deeply sorry” at how she had handled the case and had not been aware of the “abhorrent” Facebook post that led to Bull’s suspension. Having rebuffed demands from MPs to stand down from the party’s ruling national executive committee (NEC), she revealed she had changed her mind.

In a statement, she said: “It has been a privilege to serve on the Labour party NEC for the last 19 years, and I was standing down in September in any event. I have, however, decided to resign with immediate effect. It is clear that my continued membership of the NEC has become a distraction for the party and an excuse for endless intrusive media harassment of myself, my family and friends. I reaffirm my complete opposition to antisemitism and my abhorrence of Holocaust denial.”

She will be replaced on the NEC by the comedian Eddie Izzard. Corbyn has vowed to be “a militant opponent of antisemitism”, but many of his supporters believe the issue is being exaggerated by his political opponents.

Garrard claimed that Labour’s leadership had in effect “supported and endorsed” acts of antisemitism. “As one of the former leading political and financial supporters of the Labour party, of which I was a member for so many decades, I no longer feel any affinity with, or connection to, what it seems to have become,” he said. “I have watched with dismay and foreboding the manner in which the leadership has, in my view, over the last two years, conducted itself.

“I consider that it has supported and endorsed the most blatant acts of antisemitism. And yet it has failed to expel many of those who have engaged in the grossest derogatory fantasies about Jewish/Zionist conspiracies – and Jewish characterisations and accusations which conjure up the very kind of antisemitic attacks that led to such unbearable consequences for innocent millions in the past. So there no longer exists a party which even pretends to maintain and promote the principles and the integrity of what always was, to me, the Labour party.

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“On the contrary, I have been witnessing, since Mr Corbyn became leader, a philosophical and a political policy which espouses, in nearly every respect, the very antithesis of the great party under whose reputation, and under whose flag, it now seeks to fly and where so many other Jews were once so proud to stand.”

Last week, two leading Jewish organisations led a protest against antisemitism within Labour. The party has now vowed to implement the full recommendations of its 2016 internal inquiry into the issue.

In response to Garrard’s remarks, a Labour spokesman said: “As Jeremy said in his email to all members this week, our party is at its best when we work together, uniting people in hope and against fear and division.

“Jeremy has made it clear that antisemitism in all its forms has absolutely no place in our party and he is committed to rooting it out.”

The party has a backlog of more than 70 cases of alleged antisemitism, although groups reporting such allegations claim the figure is far higher. It has also yet to deal with high-profile cases such as that of the former London mayor Ken Livingstone, suspended for saying that Hitler supported Zionism “before he went mad and ended up killing six million Jews”.

A new poll has revealed that party members are firmly behind Corbyn’s leadership, and 77% believe the antisemitism row has been exaggerated, but 66% say it is a genuine problem. Cases of alleged antisemitism are still emerging.

On Friday, the Observer saw minutes from a Birkenhead branch meeting early this year, which showed it had turned down diversity training with Labour’s affiliated Jewish organisation for fear it had “possible links with Isis and the Israeli government”.

Insiders say Labour’s quasi-judicial disciplinary process prevents cases being dealt with rapidly. Accusations are examined by an NEC panel that meets only every three months. Some are referred on to a party court setting, where members can have legal representation. “It is fine when you hear two or three cases a year. It doesn’t work if we’re suspending several people a week,” said one party veteran.