The former chairman of Wendy Alexander's constituency party is being investigated by police and has been suspended by Labour officials amid claims of financial irregularities.
Tommy Williams, who is also a councillor in Renfrewshire, was dismissed from his job at Glasgow City Council as a community support worker last month along with a colleague.
Strathclyde Police are investigating the allegations, which are believed to centre on claims that Mr Williams' time sheets showed he was at work when he was not.
A Labour Party spokeswoman yesterday said they had taken disciplinary action pending the outcome of the police investigation. She said: "Mr Williams is under Labour Party administrative suspension. That means he has been suspended as a Labour councillor and from the party."
Although he can still perform duties such as holding surgeries in his Paisley North West ward, Mr Williams cannot attend Labour group meetings and has also had the party whip withdrawn.
Iain McMillan, the Labour group leader on Renfrewshire Council, said: "He has been suspended and we are waiting for the result of the inquiries and for information from the Labour Party nationally."
Mr Williams' suspension is the second local party embarrassment for the Scottish Labour leader - who is already under investigation over an illegal donation to her leadership campaign - in the past few days.
Earlier this week, it emerged Ms Alexander's election agent, Terry Kelly, had sparked a row by describing women as "thick" on his website.
One female visitor to the site had asked: "Why are no women allowed to comment here? You've mentioned one being banned, you've called a black woman a liar for talking about racism but then no others have been allowed to comment. Councillor, are you a sexist?"
Councillor Kelly responded: "You have just perfectly demonstrated why, it's because they are thick."
A spokesman for the Electoral Commission yesterday said there were no new developments in their investigation into an illegal £950 donation to her leadership campaign. The Herald revealed in November how Ms Alexander's team had accepted the money from Paul Green, a Jersey-based businessman, despite the fact that non-UK residents are barred from making political contributions.
Ms Alexander has admitted the law was broken but insists she is not guilty of any "intentional wrongdoing".
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