Clare Short faces "fast-track" disciplinary action for her withering attack on Tony Blair and New Labour, it was revealed today.
The former International Development Secretary, who quit her post over the Iraq war, said she was "profoundly ashamed" of the Government and called for voters to shun the party to create a hung Parliament.
In an article for The Independent, she also criticised Mr Blair's "craven" support for US policies and said he had made the world a more dangerous place.
But her comments drew a furious response from Chief Whip Jacqui Smith, who branded them "completely unacceptable".
"Clare Short's public admission that she would welcome the defeat of her Labour parliamentary colleagues and the Labour Government at the next general election are completely unacceptable. I have previously made this clear to her," Ms Smith said.
"As Chief Whip, I can recommend the whip be withdrawn from parliamentary colleagues or suspend them from the whip.
"However, Clare Short's comments and actions are so serious, I am now taking the matter further by referring her conduct to the party chair and the general secretary of the Labour Party."
A Labour Party source said action against Ms Short was being "fast-tracked" because Ms Smith and MPs - particularly those in marginal seats - were so "incensed" by her comments.
It had been decided that referring the matter "straight to the top" of the Party would be quicker than removing the Whip while Westminster was in recess.
The source said the frustration with Ms Short was so great that disciplinary action could involve "the full bangs and whistles". The most serious penalty that could be imposed is expulsion from the party.
It is not clear whether potential expulsion could take place before the Labour Party conference begins on September 24.
The source said: "We have had calls coming in from MPs all day about this, and people are very angry.
"Jacqui has written to Clare twice before about her interesting thoughts that her Parliamentary colleagues should be defeated.
"Previously we tried to arrange a meeting with four or five of the most marginal MPs who wanted very much to talk to her about it, but she refused."
The next step is likely to be for Party Chair Hazel Blears to write to Ms Short asking her to retract her comments.
The ex-Cabinet minister announced today that she would be stepping down from her Birmingham Ladywood seat - where she has a 6,801 majority - at the next election.
She said leaving after 23 years as an MP was a big decision - although she did not completely rule out standing again as an independent candidate.
In a vitriolic piece in The Independent, she wrote: "There are many good things that New Labour has done since 1997, mostly things Labour committed itself to before the New Labour coup, but I have reached a stage where I am profoundly ashamed of the Government."
Lambasting Mr Blair's support for "US neoconservative foreign policy", she said: "He has dishonoured the UK, undermined the UN and international law and helped to make the world a more dangerous place."
She went on: "In addition to the arrogance and lack of principle of New Labour, there is an incredible incompetence.
"Policy is announced from No 10 to grab media attention and nothing is properly thought through."
In 2003, Ms Short stayed in Mr Blair's Government despite her opposition to the Iraq war but quit later over her disillusionment with the international effort to rebuild the country.
Today, she said the future of British politics was a hung parliament which would encourage electoral reform.
She said Labour should hold a third of the seats, the Tories a third and the rest should be made up of Greens and other parties.
Ms Short said the Chief Whip Jacqui Smith had warned her she could not recommend a hung parliament because that would mean losing Labour seats, and said she was standing down in order to "speak the truth and support the changes that are needed".
Asked on BBC Radio 4's Today programme if she might lose the Labour whip by campaigning for a hung parliament now, Ms Short said: "I will pay whatever price because in the end you shouldn't be in politics if you can't speak your truth."Reuse content