A Tory MEP at the centre of an expenses probe has had his name removed from the party's list of approved candidates.
Bashir Khanbhai had represented the Eastern region
The move comes just days after Bashir Khanbhai was given the backing of party leader Michael Howard.
A statement from the Conservatives said he was taken off the list "in the light of new information about his travel allowance claims" sent in on 10 May.
Mr Khanbhai's conduct had already been deemed as falling below the standard expected of an MEP by a Tory committee.
Thrown off list
The statement from the Conservatives said: "In the light of new information about his travel allowance claims sent to the Conservative Party by Mr Khanbhai on Monday 10th May, John Taylor CBE, Chairman of the Board's Committee on Candidates, will be referring a number of issues to the European Parliament authorities for further investigation."
Mr Khanbhai had been in third place on a list of seven Tory candidates in the Eastern region.
Despite an earlier recommendation saying he should be removed from the approved candidates' list, he had appealed to the party's full committee on candidates ahead of European elections on 10 June.
That committee said that although it agreed with the original panel's conclusion that Mr Khanbhai, 58, should have shown more diligence they felt he had made an "inadvertent error".
It emerged a week ago that the European Parliament has put off reforming its expenses system until after the June elections.
Mr Khanbhai's problems emerged despite his website listing "attacking fraud and mismanagement in Brussels, eg European Investment Bank" as part of his work.
MEPs can claim taxpayers' money for travel to and from Britain and from airports to their homes and offices.
A Conservative Party spokesman said repaid money claimed by Mr Khanbhai, estimated at around £7,000, concerned "a daily working allowance covering travel expenses".
He added: "The money that was wrongly claimed has now been repaid and the matter is closed."
During a visit to Cambridge last Friday, Mr Howard said it seemed "perfectly possible" to him that an inadvertent mistake had been made and "not a deliberate attempt
to gain from dishonesty".
But Labour MEP for the East of England, Richard Howitt, said the affair showed a "huge misjudgement".
He has been calling for Mr Khanbhai's deselection since the expenses issue first emerged.
"Only four days ago Michael Howard launched the Conservative campaign in the east of England giving Mr Khanbhai his full and unstinting support," said Mr Howitt.
"Today's decision shows what a huge misjudgement that was."
Lib Dem parliamentary chairman Matthew Taylor said: "Given the clear abuse of taxpayers' money by Bashir Khanbhai it is extraordinary that it has taken the Conservatives so long to act.
"So much for the Tories' claims to be the party most concerned about corruption in Europe."
There are four contact addresses listed on Mr Khanbhai's website including one in Wroxham, Norfolk which journalists in the area earlier this year revealed did not exist.
The MEP said it was a postal address and it is thought mail was instead delivered to a neighbouring boatyard for collection.
There have been complaints that MEPs are able to claim for business class flights but travel on economy class tickets and pocket the difference in cost.
Apart from the travel costs, MEPs also receive a daily allowance of 260 euros to cover accommodation and food when they attend the parliament in Brussels or Strasbourg.
A previous attempt at reform was blocked in January and a spokesman for European Parliament President Pat Cox said he and the 14 vice-presidents had run out of time when debating the issue at a meeting on Tuesday.
"They will look at it again on 13 July in a special meeting," added the spokesman.