Billy Joe Saunders has been suspended by the Amateur Boxing Association pending a hearing after allegations of lewd behaviour during a pre-Games training camp in France.
The 18-year-old Saunders, who was beaten 13-6 in the welterweight second round by world-class Cuban Carlos Banteaux last Thursday, flew home to find a letter waiting for him from the governing body.
A British Olympic Association spokesman said: "We can confirm Billy Joe Saunders has received a letter from the Amateur Boxing Association suspending him pending a hearing." The news came one day after James Degale confirmed the best British boxing performance at an Olympic Games for 36 years when he became the third fighter to guarantee a medal in Beijing.
In a statement the British team manager Terry Edwards said he was "extremely disillusioned" by the allegations and questioned the timing of the reports, coming shortly before his trio of remaining fighters face crucial semi-final bouts.
Edwards said in a statement: "My focus over the next 48 hours is to prepare my three boxers for their semi-final bouts tomorrow. The allegations made in the media about the conduct of athletes on the British boxing programme are, on the whole, unfounded.
He went on: "I feel extremely disillusioned that I have learnt of the suspension of one of my boxers from the media. I have three boxers who are fighting to win gold medals, and I will not allow anything to distract my lads from what they need to do in the ring."
Edwards thought that a number of other reports of indiscipline involving the squad were incorrect or exaggerated, but stressed he would not address them specifically until all his fighters had completed their Olympic competition this week.
Team GB Chef de Mission Simon Clegg said: "The Amateur Boxing Association choosing to yesterday issue Billy Joe Saunders with a suspension relating to an incident which happened months before the Beijing Olympic Games is extremely disappointing.
"The release of these allegations at this time could prove detrimental to the critical preparations of the other three boxers who will be contesting to reach the final of the boxing competition.
"We are frustrated that our athletes and the boxing coaching team will have to deal with this distraction at this point in the Games. Nobody involved with boxing should be distracting the team at this time."
Richard Caborn, the former sports minister who is president of the ABA, said: "I hope this matter does not overshadow what has been a fantastic Games for the British Olympic boxing team. It is our best Olympics for more than 30 years, since 1972, and could be even better if one of our boxers win gold."
Caborn said he has spoken to Edwards and passed on an invitation to the whole team to come to a reception at the House of Commons. The ABA will hold a full hearing to test the allegations.