The Chief Rabbi has accused the Labour Party of failing the Jewish community by not expelling ex-London mayor Ken Livingstone over controversial remarks regarding Adolf Hitler and Zionism.
The decision by a disciplinary panel to suspend Mr Livingstone for a further year because of the comments also sparked outrage from a number of Labour MPs.
Chief Rabbi Ephraim Mirvis said: "This was a chance for the Labour Party to show that it would not tolerate wilful and unapologetic baiting of the Jewish community, by shamefully using the Holocaust as a tool with which to inflict the maximum amount of offence.
"Worryingly, the party has yet again failed to show that it is sufficiently serious about tackling the scourge of anti-Semitism.
"The Labour Party has failed the Jewish community, it has failed its members and it has failed all those who believe in zero tolerance of anti-Semitism."
The intervention came as Mr Livingstone vowed to campaign against the suspension, insisting he had told the historical truth, and would now consult lawyers on his legal position.
Labour MP John Woodcock branded the decision to suspend, rather than expel, the former mayor as "pathetic".
He tweeted: "This pathetic Livingstone sentence is an important moment Labour members: do we stand for decency against this or are we part of the decay?"
Fellow Labour MP Wes Streeting tweeted: "So much for zero tolerance approach to anti-Semitism - this is a terrible betrayal of Jewish Labour supporters and our values."
Mr Livingstone, who compared the disciplinary hearing to a North Korean court, said: "I expected them to expel me so I've now got to consider whether I challenge this legally or just live with it.
"You can't apologise for telling the truth. I will be launching a campaign to overturn my suspension of party membership."
The Labour veteran was suspended in April last year after claiming that Hitler supported Zionism in the 1930s before he ''went mad and ended up killing six million Jews''.
Mr Livingstone insisted that he had never said Hitler was a Zionist, only that Hitler had supported Zionism at one time.
Jeremy Newmark, chairman of the Jewish Labour Movement, called the suspension "quite insufficient".
"It seems the party is operating some kind of revolving door policy where one can make deeply hurtful and offensive comments, denies the history of the Holocaust, and dip in and out of party membership," he said.
"It's a betrayal of the values of our party and what it stands for.
"I feel they've fudged an incredibly important and significant decision, a moment that could have been a turning point for the Labour Party in proving that it has zero tolerance for anti-Semitism appears to have been wasted."
Labour's shadow attorney general Shami Chakrabarti, who carried out a controversial inquiry into allegations of anti-Semitism in the party before being made a peer by Jeremy Corbyn, said: "Labour is the party of both equality and natural justice.
"This is demonstrated by its record of legislation in government and its ability to look at itself fairly and carefully in the mirror in more difficult times, however painful this might be.
"I hope people might now revisit my report and remind themselves of better ways to argue about difficult issues without compromising our values of solidarity, tolerance and respect."
A Labour spokesman said the party's National Constitutional Committee had found the charges against Mr Livingstone to be proved and he would be suspended for two years, which due to him being suspended for the past 11 months, would see him a full member again at the end of April next year.
The suspension means Mr Livingstone can not stand in parliamentary or council elections for the party during the next year.
Tory MP Mike Freer said: "It beggars belief that Labour won't deal with the anti-Semitism problem in their party.
"Once again they had an opportunity to send a clear message that anti-Semitism has no place in politics or society, but they bottled it."