The head of the Labour Party's disputes panel has quit after it emerged she had opposed the suspension of a council candidate accused of Holocaust denial.
Christine Shawcroft sent an email calling for the reinstatement of Alan Bull, who had been due to stand in local elections in Peterborough in May.
In a statement she said she had not been aware of the "abhorrent" Facebook post that led to his suspension.
Mr Bull said he reposted an article on Facebook for the purpose of debate.
He told the BBC that he shared the article, which claimed the Holocaust was a "hoax", with friends without comment – but said he did not agree with its content.
Ms Shawcroft – a director of the pro-Corbyn Momentum group – only became the head of the disputes committee, which investigates allegations of sexual harassment, anti-Semitism and disciplinary breaches, in January.
She said she was "deeply sorry" for her "wrong and misguided questions on this case".
In her original email, Ms Shawcroft said she was "concerned" to hear about the suspension of Mr Bull for "a Facebook post taken completely out of context and alleged to show anti-Semitism".
Some people in Peterborough's Labour Party had "political reasons" for not wanting him to stand, she wrote, adding: "I am concerned that party disciplinary procedures are being used in the pursuit of partisan disputes in local parties, wasting a great deal of staff time in the process."
She ended her email by saying the party had "sat on" the complaint for months, adding: "I think we should reinstate his membership and allow him to contest the ward for which he has been selected."
But in a statement announcing her resignation on Wednesday night, she said: "I sent this email before being aware of the full information about this case and I had not been shown the image of his abhorrent Facebook post. Had I seen this image, I would not have requested that the decision to suspend him be re-considered. I am deeply sorry for having done so."
In a reference to Monday's demonstration by Jewish groups against the Labour leadership, she added: "This week we have seen a clear expression of the pain and hurt that has been caused to Jewish members of our party and the wider Jewish community by anti-Semitic abuse and language, and by the reality of anti-Semitism being denied and downplayed by others.
"In light of this, I have decided to stand down as chair of the disputes panel to ensure my wrong and misguided questions on this case do not cause doubt or anxiety about our processes."
Ms Shawcroft's resignation broke as Labour leader Jeremy Corbyn used an interview with Jewish News to describe anti-Semitism as a "cancer in our society".
Mr Corbyn, who has faced criticism for questioning the removal of a mural that was branded anti-Semitic in 2012, said: "I'm not an anti-Semite in any way, never have been, never will be."
Asked about criticism by some of his supporters of MPs who joined the demonstration, he said: "Any abuse makes me profoundly concerned and any abuse that is done is certainly not done in my name.
"People have a right to speak out and a right to demonstrate and that surely is something that is intrinsic in any democratic society. I will not tolerate abuse of people for their beliefs."
He said none of the "terrible" abuse aimed at Labour MP Luciana Berger – who raised the issue of the mural on Twitter – "can be done in our name or in my name".
He also said deselection threats against another MP who attended the demo, David Lammy, were "up to the local party" but added: "David Lammy is a colleague, a friend of mine, I admire what he stands for and what he does and he should not be condemned for that."
Also on Wednesday evening, the Board of Deputies wrote to Mr Corbyn calling on him to disown supporters who had "vilified" the anti-Semitism protesters.
"Nobody should be vilified for opposing anti-Semitism. Those Labour Party members and Labour-supporting blogs pushing the abuse are largely doing so in your name," the letter said.