The decision to banish Mr Bo from the Central Committee and its Politburo, which effectively ends the career of China's brashest and most controversial politician, and the confirmation his wife is suspected in the murder of Briton Neil Heywood were reported by the official Xinhua news agency.
"Comrade Bo Xilai is suspected of being involved in serious disciplinary violations," said the news agency said, citing a decision by the central party leadership, which decided to suspend Mr Bo from its top ranks.
"Police set up a team to reinvestigate the case of the British national Neil Heywood who was found dead in Chongqing," Xinhau said in a separate report, referring to the sprawling south-western municipality where Mr Bo was party chief until he was dismissed in March as a scandal surrounding him unfolded.
"According to the reinvestigation results, the existing evidence indicates Heywood died of homicide, of which Gu Kailai and Zhang Xiaojun, an assistant in Mr Bo's household, are highly suspected," said the news agency, citing a dispute over unspecified "economic interests" between Gu and Mr Heywood.
The Central Committee is a council of around 200 full members who meet about once a year and the Politburo is a more powerful body of about two dozen Central Committee members.
The announcements are the latest dramatic turns in the scandal over Mr Bo and his family that emerged after his vice-mayor, Wang Lijun, fled into a US consulate for 24 hours in February.
Wang's flight triggered a series of revelations and allegations, including questions about the death of the British businessman close to Mr Bo's family.
The party settles on a new top leadership late this year, and Mr Bo was widely seen as pressing for a top post in the Politburo Standing Committee, the innermost core of power.
"This means that Mr Bo's political career is effectively over," Chen Ziming, an independent political scholar. "But a decision to formally expel him would have to be made by the full Central Committee, which would have to receive a report from the Central Discipline Inspection Commission."
The discipline commission is an elite body that enforces party rules and investigates officials accused of corruption and other abuses.
The decision does not mean Mr Bo has been expelled from the Communist Party. But that risk, and the possibility of criminal charges, remain if the investigation gathers momentum.
Mr Wang's flight to the US consulate and his allegations prompted the British Government to urge an investigation into the death in November of Heywood.
Mr Bo, 62, and his wife have disappeared from public view since his removal as chief of Chongqing, and they have not responded publicly to the reports.
Nor has Mr Wang, who is under investigation.
Mr Bo arrived in Chongqing in 2007 and vowed to narrow the gap between rich and poor, kindling hopes among supporters that he could nudge the whole country in a similar populist direction if he entered the central leadership.
In a news conference days before his dismissal as Chongqing chief, Mr Bo scorned as nonsense unspecified accusations of misdeeds by his wife and said some people were pouring "filth on my family".