The Liberal Democrats dismissed sex claims against the Portsmouth MP Mike Hancock in 2012, a letter obtained by Sky News reveals.
The letter, dated February 2012, said that the allegations against Mr Hancock had been considered but that they did not merit an investigation by the party.
In response to a letter written by the lawyer of the woman at the centre of allegations, the Liberal Democrats' official response said: "Taking into account the contents of that correspondence, and applying the Party Constitution and membership rules, the committee decided that it would not commence any investigation or take any other action in respect of the matter that you have raised.
"In reaching this decision, the committee also took into account the nature of the police investigation and the stance of the Office of the Parliamentary Comission for Standards (OPCS).
"As a result, that has to be an end to the matter."
Mr Hancock, 67, was suspended by the Liberal Democrat party yesterday over claims of sexual impropriety towards a woman constituent after a report by a barrister into his behaviour was leaked on the internet.
The development intensified the sex claims scandal which has engulfed the party, and led to significant criticism of Nick Clegg's leadership, following the fall out from the case of the former party chief executive Lord Rennard, who was accused of sexually harassing women party activists.
The report, by Nigel Pascoe QC, which was carried out for Portsmouth City Council, concluded that the barrister had no doubt that the complainant had provided "compelling prima facie evidence of serious and unwelcome sexual behaviour" carried out towards her by Mr Hancock.
He described the woman as "a straightforward and vulnerable person, angry and hurt by what she said had happened to her".
He also acknowledged that Mr Hancock, who was exposed in 2011 for having an affair with a Russian aide 40 years his junior, was not motivated "solely by sexual desire" and that he had sought to help her "wholly properly" as a local councillor.
But, crucially, the Liberal Democrats said it was the first time the party had seen the report, which was released last year, and that given its conclusions they had decided to suspend the veteran MP.
However, it is clear from the February 2012 letter obtained by Sky News that the party was made aware of the severity of the allegations against Mr Hancock.
In fact in a letter to Liberal Democrat Central Office in October 2011 from the woman's lawyer, Harriet Wistrich, she points out that her client had written to Mr Clegg to raise her concerns but that she had not received a response.
But a Lib Dem spokesman yesterday said: "The Liberal Democrats have this afternoon, for the first time, had sight of a Portsmouth City Council report by Nigel Pascoe QC into allegations of sexual impropriety by Mike Hancock.
"Given Nigel Pascoe QC's conclusions in his report, we have immediately suspended Mike Hancock's membership of the party."
Mr Hancock, who is also a Portsmouth councillor, has been accused of sexually assaulting the woman after she contacted him in 2009 for help dealing with a difficult neighbour.
Police ruled that no action should be taken against Mr Hancock but the woman is taking her case to the High Court in a civil claim.
Mr Hancock has always denied the claims and resigned the Liberal Democrat whip last year to fight the case, however, he remained a Liberal Democrat councillor in Portsmouth.
The council opposed calls from Conservative and Lib Dem councillors to publish the report at a council meeting this week, claiming it would be inappropriate ahead of a civil court case brought by Mr Hancock's accuser being heard this Friday.
It has postponed taking any disciplinary action against Mr Hancock until the civil case has been heard.
:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.
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