Anger within the Liberal Democrats over the way allegations of sexual harassment against Lord Rennard have been handled has resulted in open warfare between Nick Clegg and senior peers.
The Liberal Democrat leader said Lord Rennard, who has strenuously denied the claims, should not have the party whip reinstated unless he apologised but Lord Carlile said it was an "absurdity" to ask him to say sorry.
Leading lawyer Lord Carlile said the Lib Dems' handling of the situation "makes the North Korean legal system look benign".
Disciplinary proceedings against former chief executive Lord Rennard were dropped because an investigation by Alistair Webster QC concluded that they could not be proven beyond reasonable doubt.
But Mr Webster recommended that Lord Rennard should apologise and change his behaviour, and more than 120 party members have written to a national newspaper demanding that the peer is blocked from party activities unless he says sorry.
But Lord Carlile claimed Lord Rennard had the support of a "great number" of his fellow members of the upper house - indicating that Mr Clegg's stance will face resistance from some of the party's most respected names.
A decision on Lord Rennard's future within the party could come on Monday, when Lib Dem sources said the whip was due to be restored to him.
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."
But Lord Carlile, who has been acting as Lord Rennard's legal adviser, told BBC 2's Newsnight: "The report found there was no case to answer.
"Lord Rennard has always denied these allegations. It is an absurdity to require him to apologise for something he denies."
In off-air comments he said: "There were four statements with some kind of complaint and about 100 putting the other side of the case. The Liberal Democrats should not pretend the case was proved - it was not considered worth sending to tribunal.
"I'm deeply shocked by this. It makes the North Korean legal system look benign compared to the Liberal Democrats. He has the support of a great number of his fellow peers."
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 peer has indicated he will return to an elected position on the party's Federal Policy Committee now that the disciplinary process has ended.
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, told the newspaper the committee was now split "about 50-50" on whether the peer should be allowed back.