Liberal Democrat MP Jenny Tonge has been sacked from the party's front bench for saying she could have become a suicide bomber.
The Liberal Democrat spokeswoman for children had repeatedly said she understood why militant Palestinians were driven to carry out the attacks.
She had also insisted that living in the Middle East could have driven her to do the same.
Lib Dem leader Charles Kennedy said he had now asked her to stand down as the party's spokeswoman for children.
"Her recent remarks about suicide bombers are completely unacceptable," Mr Kennedy said in a statement.
"They are not compatible with Liberal Democrat party policies and principles.
"There can be no justification, under any circumstances for taking innocent lives through terrorism.
"I am sorry to lose Dr Tonge from the frontbench team.
"She will continue to represent her constituency on the backbenches of the House of Commons."
Mr Kennedy had been under mounting pressure to act as a defiant Dr Tonge stood by her remarks, first made at a pro-Palestinian lobby in Parliament onWednesday.
Attempts to distance the party from her views did not satisfy Opposition politicians. The Israeli government also condemned her remarks, branding them "deeply immoral".
Dr Tonge, who stands down as MP for Richmond Park at the next election, admitted her views might upset some but said did not regret airing them.
"I was just trying to say how, having seen the violence, humiliation and provocation Palestinians live under every day, and have done now for decades, I could understand, I was trying to understand, where they come from," she said.
"If I had been a mother and a grandmother in Palestine living for decades in that situation, I don't know, I may very well have become one myself."
Dr Tonge, the party's former International Development spokeswoman, later said: "That doesn't mean to say I condone suicide bombers, I don't.
"I think it's appalling and loathsome. But we have to try and understand where they are coming from and understand the situation in which they live."Reuse content