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Derby North MP was suspended in February has been lifted on Wednesday by a three-person NEC panel on anti-semitism.
Mr Williamson issued with a formal warning after being found to have breached the party’s rules.
Mr Williamson was served with a “notice of investigation” four months ago after it emerged he told a meeting of Sheffield Momentum that Labour had been “too apologetic” over its anti-semitism problem.
To applause from those present, Mr Williamson said: “The party that has done more to stand up to racism is now being demonised as a racist, bigoted party.
“I have got to say I think our party’s response has been partly responsible for that because in my opinion… we’ve backed off far too much, we have given too much ground, we’ve been too apologetic…
“We’ve done more to actually address the scourge of anti-semitism than any other political party. Any other political party. And yet we are being traduced.”
Mr Williamson eventually issued an apology for his remarks, but was then suspended by the party so a full investigation could be carried out.
There as been an ongoing Left wing campaign showing support and solidarity with Chris Williamson #IStandWithChrisWilliamson
A party spokesman said: “The Labour Party takes all complaints extremely seriously, which are investigated in line with our rules and procedures. We can’t comment on individual cases.”
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