Frank Field has resigned the Labour whip, accusing the party leadership of becoming “a force for anti-Semitism in British politics”.
The prominent backbencher said he was quitting to stand as an “independent Labour” MP because of a “series of attempts” by leader Jeremy Corbyn to deny previous statements were anti-Semitic.
Mr Field said soldiers fought in the Second World War to “banish these views” but that the Labour leadership was “doing nothing substantive” to address the “erosion of our core values”.
He called on Labour to “regain its position as being the leading force against racism in this country”.
A Labour party spokesperson said: “Jeremy Corbyn thanks Frank Field for his service to the Labour Party.”
Deputy leader Tom Watson called the departure a “serious loss” and said it “reflects both the deep divisions in the party and the sense of drift engulfing us”. “It is a major wake up call,” he added.
Mr Field, who has been an MP for 39 years and represents Birkenhead in the House of Commons, made the announcement in a letter to Labour’s chief whip, Nick Brown.
He said the leadership needed to “recognise the culture of nastiness, bullying, and intimidation that it has allowed to grow unchecked and expel local members whose public conduct is simply disgraceful”.
The work and pensions select committee chair also confirmed he would remain a member of the party he joined 58 years ago.
He said: “The values I have espoused during this time will be the same that will continue to govern my conduct and I also intend, providence willing, to represent those views when the next election is called.
“Few events would give me greater pleasure than to apply to the Parliamentary Labour Party for the whip.
“But great change in the leadership’s stance on the issues outlined in this letter will need to take place before I will be able to do so.”
Conservative chair Brandon Lewis challenged other Labour MPs to follow Mr Field or they would “continue to endorse Jeremy Corbyn’s failure to act” on bullying and anti-Semtism.
He said: “Frank Field’s resignation is a damning indictment of Jeremy Corbyn’s total inability to take action against bullying and anti-Semitic racism within Labour.
“Despite promising a ‘kinder politics’, time and time again Corbyn has allowed people to get away with doing and saying things which have no place in public life.”
Nigel Farage, the former leader of UKIP, also tweeted: “In an age when few politicians are respected, Frank Field is listened to by many, regardless of party. His resignation from Labour is significant.”
Richard Burgon, Labour’s shadow justice secretary, suggested Mr Field should either stand down or call a by-election.
He wrote on Twitter: “Politicians who are elected as Labour MPs by their constituents and who then leave the Labour Party should do the right and respectful thing and call a by-election straight away.
“They should ask for their constituents’ consent to continue to represent them on a different basis.”
Mr Corbyn has come under fire for attacking British Zionists, accusing them of not understanding English irony; not implementing the International Holocaust Remembrance Alliance definition and examples of anti-Semitism in full in Labour’s new code of conduct; and comparing actions in the West Bank to World War Two occupations.
Mr Field lost a vote of confidence by local members in his constituency association in July.
The long-time eurosceptic sided with the government to pass Brexit laws days before.
Mr Field hit back that his local party was trying to “misrepresent” his voting in the Commons as backing for the Conservative Party so they could get rid of him.
“It would have been a betrayal of the principles I have held for my entire political life, had I voted against the legislation two weeks ago,” he said at the time.