Lord Rennard now faces investigation for bringing the Liberal Democrats into disrepute by failing to apologise to the women who made complaints against him, the party said in a statement.
The announcement has seen off a potential challenge to leader Nick Clegg's authority by preventing the former Lib Dem chief executive taking up his seat alongside the party's other peers in the House of Lords, as he had planned.
Mr Clegg has made clear that he is not willing to see Lord Rennard reinstated as a Lib Dem peer until he says sorry, telling the peer: "No apology, no whip."
In a statement released just minutes before Lord Rennard had been expected to re-enter the Upper House, the Liberal Democrats said: "Nick Clegg made clear last week, and again this morning, that it would be inappropriate for Lord Rennard to resume the Liberal Democrat whip unless he apologises. Lord Rennard has refused to do so.
"The regional parties committee, which oversees disciplinary procedures under the English party membership rules, today decided to suspend Lord Rennard's membership of the party pending a disciplinary procedure. As such, he cannot return to the Liberal Democrat group in the House of Lords.
"Lord Rennard will now be investigated for bringing the party into disrepute on the grounds of his failure to apologise, as recommended by Alistair Webster QC."