Christine Shawcroft resigned as disputes panel chairwoman after opposing the suspension of a council candidate accused of Holocaust denial.
The Labour leadership is facing growing pressure to tackle accusations of anti-semitism within the party.
Corbyn said in a Passover message on Friday that Labour needed to “do better” in tackling the issue, adding it was “sometimes harder to see” anti-semitism when it is “closer to home”.
Shawcroft issued a statement on Facebook saying it “beggars belief” that Corbyn is being accused of not doing enough to tackle the problem.
More than 40 Labour MPs and peers have signed an open letter calling for Shawcroft to be suspended from the National Executive Committee (NEC).
Shawcroft posted a statement that read:
“Hi everyone, in case anyone has been misled by the press coverage, I am not a Holocaust denier and I would not support a Holocaust denier.
“I have been trying to support members who have been affected by all the shenanigans around Council selections, and thought this case was just another one of those.
“I had not seen the appalling and abhorrent post which was shared, and if I had seen it I would not have sent the supportive email.
“As soon as I saw it I told the member that he should have antisemitisim training.
“It is entirely right that having made the initial mistake, I should resign as Chair of the Disputes Panel (which never meant I had the power to overturn suspensions anyway).
“This whole row is being stirred up to attack Jeremy, as we all know. That someone who has spent his whole life fighting racism in all its forms should find himself being accused of not doing enough to counter it, absolutely beggars belief.”
Labour MP Siobhain McDonagh, lead signatory of the letter calling for Shawcroft to be removed from the NEC, told the BBC the group felt “very strongly” about the issue.
The missive, also signed by MPs including Mike Gapes and Luciana Berger, said it was “highly offensive to the Jewish community” that Shawcroft remained a member of the NEC.
Corbyn has said he hopes Passover will mark a move towards closer relations with the Jewish community and insisted he is an “ally” in the fight against anti-semitism.
The Labour leader said: “We in the Labour movement will never be complacent about anti-semitism.
“We all need to do better. I’m committed to making sure the Labour Party is a welcoming and secure place for Jewish people”.
He added: “In the fight against anti-semitism, I am your ally and always will be.”
But a Jewish Labour peer said the party leader had “encouraged and endorsed” anti-semites.
Lord Winston said hostility to Jews has “infected the Labour Party so it’s become endemic”.
Former prime minister Tony Blair said on Friday that anti-semitism had become an issue in the party because the leadership and its supporters do not really think it is a problem.
He told BBC Radio 4’s The Week In Westminster: “I think they think it’s basically something that’s got up by people who are opposed to him for all sorts of other reasons and are using anti-semitism as the battering ram against his leadership.
“When this row first began – a couple of years ago it’s really been going on now – I confess to you, because I know the history of the Labour Party, I was sceptical about it.
“But the more I talk to Labour MPs and I talk to Labour members and Labour councillors, the more I realise, I’m afraid, it’s real. It should have been dealt with before.”
Blair said it was “very painful” and he had “literally never had this discussion in the Labour Party before” before it erupted in recent years.
Rhea Wolfson, a member of the Labour Party’s NEC, told the programme: “As far as I’m aware in terms of statistics, since 2015 – which is pre-Jeremy’s leadership – around 300 cases have come of anti-semitism to the party – 150 of those people have either been expelled or have resigned (from) the party.”