MP Mark Field has been suspendedas a Foreign Office minister after a video emerged showing him pushing a female Greenpeace activist against a pillar and then grabbing her neck while she protested at the chancellor's Mansion House speech.
The video clip shows Mr Field stopping a female protester by pushing her against a column before holding her at the back of the neck and forcefully walking her out of the room.
It came as activists interrupted a black-tie event where Chancellor Philip Hammond was giving a speech.
A City of London Corporation spokesman said: "We are investigating last night's breach of security at Mansion House and will be reviewing arrangements for future events.
"The protesters were swiftly escorted out of Mansion House by security and the City of London Police."
A Number 10 spokeswoman said: "The Prime Minister has seen the footage and she found it very concerning.
"The police have said they are looking into reports over this matter and Mark Field has also referred himself to both the Cabinet Office and the Conservative Party.
"He will be suspended as a minister while investigations take place."
Greenpeace said that the activist removed by Mr Field, who they have not identified, "had a good sleep and is doing fine. We're looking after her. Thanks so much for your love and concern everyone. We're sharing positive messages with her".
Tory MP Sir Peter Bottomley told the Press Association that Mr Field had done nothing wrong.
He said: "The woman clearly was trying to create a fuss.
"Most viewers would say it's good that she didn't succeed."
When asked if Mr Field had been heavy-handed with the protester by grabbing her by the back of the neck, Sir Peter responded: "No, he reversed her direction and she looked as though she went willingly.
"I think there's no reason to criticise Mark Field... Of course it wasn't an assault, it was a reversal of direction."
But there was condemnation from other MPs who saw the clip of Mr Field.
Labour MP Jess Phillips tweeted: "She posed no credible threat from what I can see. There is very little else that could justify this and anyone can see that this could have been done without physical contact. Every MP has to deal with protest and conflict, it is done with words. To watch this is so so awful."
Fellow Labour MP Dawn Butler said it was "horrific" and called for Mr Field to be sacked or suspended.
Ms Butler, who is shadow secretary of state for women and equalities, tweeted: "Conservative Foreign Office Minister Mark Field violently grabs a woman as she protests about climate change at the bankers' banquet. This appears to be assault. He must be immediately suspended or sacked. Due to Violence against women.
"I'm sure I'm not the only one who is wondering why no one intervened. So much violence does not seem justified. An investigation needs to take place as soon as possible."
Lib Dem MP Chuka Umunna described Mr Field's actions as "totally unacceptable" while Independent MP Sarah Wollaston said it was "Absolutely shameful, a male MP marching a woman out of a room by her neck."
Tory MP George Freeman tweeted: "This looks appallingly rough handling of a woman climate protester in a dress. But before everyone rushes to instant armchair judgement can I suggest that all of us who weren't there and don't know what was said or done just wait a few hours to hear what those who *were* there say."
Conservative former Middle East minister Alistair Burt was shown the clip on BBC's Newsnight.
He said: "I've no appreciation of the context... Mark will answer for himself but it looks to be a very difficult situation for everyone concerned."
When contacted by the Press Association, Foreign Secretary Jeremy Hunt, who is Mr Field's boss, responded with a text saying "sorry can't talk now".
Mr Hammond had barely started his address when activists interrupted the event in the City of London on Thursday night.
The disruption lasted several minutes before a slow hand clap broke out among the seated guests, and Mr Hammond got back to his feet at 9.05pm.
To a round of applause, Mr Hammond then said: "The irony of course is that this is the Government that has just led the world by committing to a zero-carbon economy by 2050."
Greenpeace later said 40 of its activists, some of whom wore red evening dresses with sashes that read "climate emergency", had interrupted the event, which was being broadcast live on television.
Footage later released by Greenpeace shows a line-up of protesters, including men who are wearing black suits and bow ties and women in red dresses and sashes, walking alongside the building, then rushing up a set of stairs and streaming into the dining hall.
A spokesman said he would not comment on how the group managed to evade security to get into the high-profile event.
In response to the video of Mr Field, the organisation tweeted: "Instead of assaulting peaceful women protesters, @MarkFieldUK would be better off spending his time tackling the #ClimateEmergency."
Greenpeace said the activists had wanted to deliver a speech on how the current system has failed.
Mr Hammond paused his speech at the request of an official in the dining hall who asked him to let security and other staff clear the noisy activists away.
The sound of alarms could be heard in the background.
Senior captains of industry and top City executives were among the invited guests.
Retiring Bank of England Governor Mark Carney later made his final Mansion House speech, which was about the future of finance.
He spoke about a new economy driven by changes in technology, demographics and the environment.
A City of London Police spokesman said: "We were alerted at 9.03pm. We were called by security at Mansion House who let us know there were a group of protesters who had gained entry and were refusing to leave.
"Officers arrived to help with their ejection. Once in the presence of the police, the protesters were co-operative and left the premises.
"No arrests were made."