The MP, who famously shared a hotel bed with a male friend to save money, predicted that the government had a "zero" chance of retaining his seat, but offered to work for his party "even as a driver or answering letters".
Around 95 members of the constituency Conservative Association took part in the deselection ballot in the paddock area of Donington Park race course. Last night, Mr Ashby, a 55-year-old barrister and company director, put his rejection down to "homophobia".
Some North-west Leicestershire Tories are "extremely prejudiced," he said. "It is the usual blind prejudice : love the Queen Mum, hate queers, hate foreigners, get out of the Common Market, keep the Queen's head on the coins.
"I find that sort of thing highly distasteful. I have spent all my life fighting against prejudice and I'm certainly not going to give into it."
Mr Ashby lost a High Court libel action against the Sunday Times which claimed he was gay. The court battle left him with legal bills exceeding pounds 400,000 and his political reputation in tatters. But he promised to help John Major's re-election fight. "I feel active. I want to do things. I hope there is a slot I can fit into, even if it is driving a car or answering letters."
The MP, who had a majority of only 979 at the last election, reserved his strongest criticism for constituency members who turned out to deselect him. "Frankly, if I am going to have an association like that I don't want to be representing them.
"That is not my approach to life. My approach is very different from that. It is one of common humanity, and Christianity and Christian humility. They are behaving like Smithfield porters - or is that being unfair to Smithfield porters?
"I am left with the conclusion that the ones who voted against me are a bunch of homophobics. That is all I can think about. I think it is a reflection on them."
North-west Leicestershire is a mixed rural-cum-former mining area, with marked rivalry between the old market town of Ashby-de-la-Zouch and Coalville, once noted for its pits and railways. Mr Ashby characterised the membership of the constituency association as being"lower middle class", adding: "It is not a cohesive body at all."
Party leaders will begin their search for a new candidate tomorrow. The outgoing MP, who entered parliament for the constituency in 1983, claimed he had a strong personal following which would evaporate after his deselection. In practice, even the most popular MP can only expect a personal vote of a couple of thousand.
Mr Ashby concluded: "Now I feel more relaxed. I feel a great sense of relief."Reuse content