The party's National Executive Committee said that Mr Lloyd had "misled" both it and the general secretary of the party, Tom Sawyer, about information concerning his candidature.
A panel set up by the NEC to investigate claims about him concluded: "Mr Lloyd's lack of openness had brought into question his credibility and integrity as a candidate". It warned that if Mr Lloyd refused to stand down, it would rescind his endorsement as candidate.
Mr Lloyd, the deputy leader of Exeter City Council, is the first candidate chosen for the forthcoming general election to be rejected after having been endorsed by the NEC.
He has been attacked by the Tories after he admitted his involvement in terrorism in South Africa in the 1960s. He was a member of the African Resistance Movement, which aimed to oppose apartheid by planting bombs at targets such as electricity pylons and radio masts. However, Mr Lloyd, who works as a barrister, was also accused of betraying a fellow conspirator who was executed for planting a bomb inJohannesburg which killed one person.
An earlier investigation by Labour officials cleared Mr Lloyd, and he was endorsed as the party's candidate for Exeter last year. But relatives of John Harris, the man who was executed, wrote to the NEC complaining about Labour's decision to endorse Mr Lloyd as its candidate. They claim he refused to give evidence to the South African court which could have saved Mr Harris.
Mr Lloyd, who fled to Britain after the court case in the 1960s, said yesterday: "They interviewed me last week and asked me about my South African background and what I had told the local party. If you ask the party they will say nothing has come out since selection they had not known about."
Throughout the row Mr Lloyd has had firm local support. Keith Owen, chairman of Exeter Labour Party, said: "Most of the older members of the local party knew already about this. Those who didn't were told about it in the selection meeting ... How can events 30 years ago in a different country affect politics in Exeter today?" He said that at the local party's annual meeting in February there was a 70-2 vote in support of keeping Mr Lloyd as a candidate.
n A fresh row was brewing last night over the selection of Michael Wills, a TV producer, as the Labour candidate for Swindon North after the Swindon Labour Party passed a motion calling for a rerun by the NEC, writes Colin Brown.
A motion by the white-collar MSF union, passed unanimously, said it would mean local party members would have no say in the selection of the candidate. Local party supporters are backing an activist, Jim D'Avila, who has been protesting at losing the contest.Reuse content