Labour was plunged into fresh turmoil on Wednesday after Keir Starmer refused to restore the whip to Jeremy Corbyn, despite what Corbyn’s allies claim was a private deal to do so. Faced with the prospect that at least one senior Jewish MP – Margaret Hodge – could quit the party in protest at Corbyn’s return to the fold, Starmer issued a strongly worded statement saying he would not welcome his predecessor back into the parliamentary party. Starmer’s decision caused an immediate backlash on the left of the party, however, with 31 MPs from the Socialist Campaign Group calling it “wrong and damaging to the Labour party”. The decision came a day after a disciplinary panel of the party’s national executive committee (NEC) lifted the suspension of Corbyn’s party membership over controversial remarks he made when the Equality and Human Rights Commission (EHRC) published a damning report on Labour antisemitism last month. Starmer said: “Jeremy Corbyn’s actions in response to the EHRC report undermined and set back our work in restoring trust and confidence in the Labour party’s ability to tackle antisemitism. In those circumstances, I have taken the decision not to restore the whip to Jeremy Corbyn. I will keep this situation under review.” Corbyn was suspended over a statement he issued following the publication of the EHRC report on 29 October, in which he said the problem of antisemitism in Labour had been “dramatically overstated for political reasons by our opponents inside and outside the party, as well as by much of the media”. In a “clarification” submitted to the NEC and made public this week, Corbyn said claims of antisemitism had not been “exaggerated”. Starmer made his decision after speaking to Hodge on Tuesday evening. It is understood the veteran Labour MP came close to quitting. She told Starmer she felt betrayed at the swift lifting of Corbyn’s suspension and that it risked undoing every bit of trust rebuilt with Jewish community groups. Hodge told the Guardian: “Keir has made the right decision but a lot of trust has been undermined. I cannot tell you the anger across the Jewish community. There was a lot of trust and many people will feel frustrated and hurt by what has happened, that is devastating.” Corbyn’s allies are considering legal action as one possible next step – the former leader has assembled a legal fighting fund totalling more than £300,000. Starmer was accused of “bad faith” by the Unite leader, Len McCluskey, who allies say was involved in brokering a deal he and others believed would allow the former leader to sit as a Labour MP again. Multiple sources say conversations took place in recent weeks between representatives of Corbyn and key figures in Starmer’s office, including his chief of staff, Morgan McSweeney. Corbyn’s side believed the outcome of those negotiations was that the NEC would issue Corbyn with a lesser punishment, and the matter would be closed. They claim that the “clarification” issued by Corbyn earlier this week was agreed with Starmer’s office. However, a source in Starmer’s office insisted “there was no deal”. They said Corbyn had been repeatedly urged to retract his comments of last month – and his allies had merely been “lobbying” for his readmittance to the party. One Labour source also said the party leader was angered by tweets sent by people they regarded as Corbyn “outriders” on Tuesday, suggesting Corbyn had been exonerated. In fact, the NEC panel did censure Corbyn’s behaviour, issuing him with a “reminder”. Other conditions were also attached to the ruling: the Guardian understands one of these was that Corbyn take down his original controversial Facebook post, which – as of Wednesday night – he had not done. In a public statement issued on Wednesday night, McCluskey said: “I am astonished at the decision to withdraw the PLP [Parliamentary Labour party] whip from Jeremy Corbyn. “This is a vindictive and vengeful action, which despoils party democracy and due process alike, and amounts to overruling the unanimous decision of the NEC panel yesterday to readmit Jeremy to the party. “This action gives rise to double jeopardy in the handling of the case and shows marked bad faith.” Starmer’s team pointed out that the leader has no say over the makeup of NEC disciplinary panels, or their findings. Marie van der Zyl, the president of the Board of Deputies of British Jews, welcomed Starmer’s decision and criticised the process that led to Corbyn’s readmission to party membership. “Labour’s disciplinary process is clearly still not fit for purpose. Keir Starmer has now taken the appropriate leadership decision not to restore the whip to Jeremy Corbyn,” she said. “We continue to say that ‘zero tolerance’ must mean precisely that, whether for antisemites or their apologists.” The Labour MP Neil Coyle, who has been an outspoken critic of Corbyn’s approach to antisemitism while he was leader, said the case must be looked at by the independent process that Starmer said he would set up under the EHRC recommendations. “Keir is trying to deliver on his self-confessed first priority as Labour leader – to rebuild trust with the Jewish community,” he said. “The whip cannot be restored until the new, genuinely independent complaints process assesses this case and ensures a fair decision is made.” The NEC panel was convened with a day’s warning, though members were not told what case they would presiding over. It is understood panel members were given a “drastic” warning by party lawyers that anything more than a formal reprimand would have ended up in the high court. However, the panel did agree to attach conditions to the reprimand and the decision was eventually unanimous, after a lengthy debate. Party sources said there would be no way of the leader’s office fixing the panel decision, though it was known internally that the NEC panel’s power to sanction was restricted.