NICK Clegg's authority is coming under increasing pressure with the warning any attempt to stop Lord Rennard from being welcomed back into the Liberal Democrat peers' group could result in legal action.
The warning from Lord Carlile, Lord Rennard's legal adviser, comes ahead of a potential showdown in the House of Lords today when the peer at the centre of the storm is due to return to the red benches.
A vote of LibDem peers could determine Lord Rennard's fate, but the party's former chief executive has made clear he will return to an elected position on the party's Federal Policy Committee now the disciplinary process has ended.
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But party sources made it clear there might be another move against Lord Rennard for bringing the party into disrepute, which could, in theory, lead to another inquiry and his expulsion from the Liberal Democrats.
Lord Carlile said his colleague was being "lined up against a wall" and treated unfairly, given the Deputy Prime Minister had rescinded a decision to allow his colleague to re-take the whip in the Lords following the outcome of the inquiry.
In a day of strong rhetoric, Danny Alexander, the Chief Secretary to the Treasury and a close confidant of Mr Clegg's, maintained the leadership's strong line, saying a failure by Lord Rennard to apologise for his behaviour was "totally unacceptable".
Steps would be taken, he warned, saying: "Lord Rennard should not be readmitted to the group in the House of Lords until he's made a full apology for the serious harm that's been caused by his behaviour."
But, he noted, the LibDem group in the Lords had to take its own view.
Last year, Lord Rennard resigned the party whip amid claims he had made unwanted sexual advances to several women and touched them inappropriately.
Last week, an internal inquiry concluded there was broadly credible evidence dating back several years of "behaviour which violated the personal space and autonomy of the complainants", but said allegations of sexual misconduct could not be proven beyond a reasonable doubt as the party's internal disciplinary procedures required.
Yesterday, Alistair Webster QC, who investigated the allegations, said he had recommended Lord Rennard should apologise to the women involved as a matter of "common manners".
But Lord Carlile insisted his colleague should not apologise because he denied the claims, which had not been proven.
Lord Carlile explained how he was present when Lord Newby, the LibDems' Chief Whip in the upper house, last week shook hands with Lord Rennard and said the whip would be restored to him. But then Mr Clegg announced "some kind of completely arbitrary procedure the party's rules don't provide for".
The peer warned if the whip were withheld from Lord Rennard, he would take legal advice. "I don't begin to understand why Nick Clegg has intervened after a process which has been concluded in Lord Rennard's favour," he said.
Earlier, it emerged Bridget Harris, a former aide to the party leader who made allegations against Lord Rennard, had quit the party in protest at the outcome. One of four party activists who made allegations against the peer, she accused the LibDem leader of being reluctant to enter a row with party grandees.