Newport West MP Paul Flynn has been accused of making anti-Semitic remarks after questioning whether the British ambassador to Israel should be Jewish.
Mr Flynn called the claim "ludicrous" but he has been called in by Labour Party whips to explain his comments.
He had suggested that Matthew Gould, Britain's first Jewish ambassador to Israel, had "divided loyalties".
Harlow MP Robert Halfon, who is Jewish, said Mr Flynn was not anti-Semitic but he had made an "outrageous attack".
Mr Flynn has been criticised by MPs from his own side as well as by the Jewish Chronicle newspaper after saying the post of ambassador to Israel should go to "someone with roots in the UK".
He made his comments to Sir Gus O'Donnell, the UK's most senior civil servant during questioning about the relationship between former Defence Secretary Liam Fox and Mr Fox's friend and advisor Adam Werritty.
Labour Chief Whip Rosie Winterton is reported to have called Mr Flynn in to discuss his comments.
The Labour movement blog LabourList said the party's leadership was thought to be unhappy with the remarks, claiming a source said party leader Ed Miliband "thinks these comments are totally unacceptable".
Labour MP Ivan Lewis, the Shadow Secretary for International Development, described Mr Flynn's remark about Mr Gould as a "smear".
'Friend of Israel'
Conservative MP Mr Halfon, who knows Mr Flynn from their time on the Public Administration Select Committee, said: "Mr Flynn's actions betray an extraordinary mindset on the left, that allows normally highly intelligent and engaging individuals to lose all sense of proportion when the word 'Israel' is mentioned."
On his blog, Mr Flynn wrote: "I have been a lifelong friend of Israel and Jewish causes. I have visited Israel on four occasions including a private family holiday.
"Never before in my long political life has such an accusation been made. But I have been accused of being too friendly to Israel on many occasions."