Simon Hughes, the party's environment spokesman, first made his threat at a public meeting in Stepney, East London, on Sunday.
Paddy Ashdown, the party leader, set up the inquiry after allegations the election leaflets helped the neo-Nazi British National Party to its victory in a council by-election in the Millwall ward last September.
Mr Hughes said yesterday: 'Senior party members would not and could not continue in the party if the report produced a whitewash. In my view, these leaflets are racist and unacceptable. The party needs to take action against those responsible.'Reuse content