Former Liberal Democrat chief executive Lord Rennard should not rejoin the party's group in the House of Lords unless he apologises to female activists over claims of sexual harassment, Nick Clegg has said.
Internal party disciplinary proceedings against the peer were dropped after a QC investigating them decided they could not be proved beyond a reasonable doubt.
But Alistair Webster QC recommended that Lord Rennard should apologise and change his behaviour, and Mr Clegg believes that, until he says sorry, it would not be appropriate for him to rejoin the party's group in the Lords.
A number of Lib Dem members have also suggested that his refusal to apologise brings the party into disrepute - the charge that would have been levelled against him over the harassment allegations and which, if upheld, could lead to him being thrown out of the party.
A Lib Dem spokesman said: " Nick Clegg is of the view that, as long as Lord Rennard refuses the very reasonable request from Alistair Webster QC to apologise, that it is inappropriate for him to rejoin the Liberal Democrat group in the House of Lords. Nick has communicated this to the Chief Whip and Leader of the House of Lords group.
"In addition, a growing number of party members have come forward to make representations to the party that Lord Rennard's refusal to apologise in itself brings the party into disrepute.
"The Lords Chief Whip and leader of the House of Lords group will be discussing the matter with party HQ and will review the reinstatement of the whip on this basis."
The row over Lord Rennard's refusal to apologise presents a major test for Mr Clegg's authority within the party.
The Deputy Prime Minister and Lib Dem leader said Lord Rennard, the party's former elections supremo, would play no role in his 2015 campaign.
Business Secretary Vince Cable said there was "frustration" that the party's rules meant Lord Rennard could not be thrown out.
Asked if Lord Rennard should be expelled from the party, Mr Cable said: "There is a lot of frustration after this very strong report that the party's rules do not permit that action."
But he declined to say if he would like to see that happen.
Mr Clegg and Lib Dem President Tim Farron were in close discussions "seeing how we can proceed and whether our rules need revisiting", he told BBC2's Newsnight.
"They are the key decision makers within the party, they have to operate within the rules. I don't want to add an independent view to that."
Lib Dem peer Lord Carlile, who has been acting as Lord Rennard's legal adviser, claimed the former chief executive had already rejoined the party's group in the Lords earlier this week.
He told BBC Radio 4's Today programme yesterday: " He was the party's best ever and most successful chief executive and we are very glad to have him."
Asked if Lord Rennard would apologise, Lord Carlile said: "No, because there's no reason why he should because he has denied these allegations which have not been tried. Alistair Webster should not have said that."
Despite Lord Carlile's claim the Lib Dems insisted Lord Rennard does not currently have the party whip.
Lord Rennard also faces opposition to his return to an elected position on a key Lib Dem policy committee.
More than 120 Lib Dem members said in a letter to the Daily Telegraph that Lord Rennard should be barred from any party body until he apologises.
The letter backed Mr Clegg's position that the Lib Dem whip should not be reinstated until the peer said sorry.
The party activists wrote: " We believe that until he apologises and acknowledges the distress that his actions have caused, regardless of intent, he should never have had the Liberal Democrat whip restored and should be barred from any party body or involvement in any party activity that might facilitate a repeat of this situation.
"No apology; no whip."
In a sign of the divisions within the Lib Dems they added: "We note also with deep regret the failure of senior members of the Liberal Democrat parliamentary party to denounce in the strongest possible terms Lord Rennard's behaviour."
The Daily Telegraph reported that the members of the Federal Policy Committee had written to its chairman, MP Duncan Hames, demanding that Lord Rennard apologises before being allowed back onto it.
The leaked letter made clear it would be "utterly untenable" for the Lib Dems to publish a policy paper on equality issues which had links to Lord Rennard.
Susan Gaszczak, one of Lord Rennard's alleged victims, said the federal policy committee was now split "about 50-50" on whether the peer should be allowed back.