Labour members should not be banned for life even if they are excluded for anti-Semitism, a party review of the issue has found.
Baroness Royall said "people may change their views" and if they can demonstrate they have, they should be able to apply to the party's National Executive Committee (NEC) to rejoin.
If Labour followed her recommendation it would open the door for the likes of suspended MP Naz Shah and former London mayor Ken Livingstone - who sparked fury over his comments about Hitler - to be readmitted to the party in future even if they are eventually thrown out.
The pair are currently suspended pending investigations into public statements and online posts.
The review was commissioned to examine allegations of anti-Semitism in the Oxford University Labour Club (OULC) but Lady Royall said she had made recommendations for how Labour as a whole tackles anti-Semitism to avoid repetition of those events.
The former Lords leader has also offered advice to the separate inquiry into anti-Semitism being carried out by Shami Chakrabarti.
On banning members, Lady Royall said: "It is not recommended that where a person is excluded from membership for anti-Semitism this should automatically be a life ban.
"I recognise that people may change their views and that where that is demonstrable a person may be allowed to seek NEC approval for any future application to join the Labour Party."
MPs who were critical of the Labour leadership's slow response to Mr Livingstone's comments may seize on the recommendation that Labour should consider empowering the NEC through an independent panel to exclude members if there is "credible evidence" of anti-Semitism.
"Labour should consider adopting rule changes that will allow swifter action to deal with anti-Semitism," Lady Royall said.
"This could include empowering the NEC, through an appointed, authoritative and independent panel, to exclude members where there is credible evidence of anti-Semitism with a right of appeal to the National Constitutional Committee (NCC).
"The panel must be able to both speak with authority on these issues and seek advice from experts in the field where necessary.
"No doubt such a procedure could be considered for wider use."
She also called for more rigorous vetting of candidates, noting that "volunteers manage many selections and the procedures must be appropriate for the task in hand".
Labour leader Jeremy Corbyn and deputy leader Tom Watson should also be consulted on how to ensure online debate is "both welcoming and productive".
Lady Royall said the OULC was not institutionally anti-Semitic but called on the student club to examine its culture and create a "safe space" for discussion and debate without discrimination.
She said: "I do not believe that there is institutional anti-Semitism within OULC.
"Difficulties however face OULC which must be addressed to ensure a safe space for all Labour students to debate and campaign around the great ideas of our movement."
In February, Alex Chalmers, an undergraduate at Oriel College, resigned as co-chairman of the club after claiming a large proportion of members "have some kind of problem with Jews" and some sympathise with Islamic militant group Hamas.
Reports of slurs and songs sung that amount to anti-Semitism were reported by the university's Jewish Society, known as JSoc.
A Labour Party spokeswoman said: "Baroness Jan Royall presented her report to the NEC today. The NEC agreed and accepted the report. The recommendations have now been published."