Mr Wheeler is unhappy with the Conservatives' European policy
The Conservative party says it is expelling one of its multi-millionaire donors after he gave £100,000 to UKIP.
Spread-betting tycoon Stuart Wheeler said he had made the UKIP donation because he believed the Tories were too soft on European integration.
Mr Wheeler, an outspoken Eurosceptic, gave £5m to the Conservatives in 2001 and wanted to remain a party member.
The Tories said he would be given 28 days to appeal against expulsion but Mr Wheeler said he had no plans to do so.
He said the party was entitled to expel him, but he stressed he was not a party spokesman and should be allowed to express his views.
The tycoon had said that he would vote UKIP in European elections in June but that he intended to remain a member of the Conservative party.
'Work from within'
On Sunday, he said he had found out he was being expelled by the Conservatives after hearing the news on the BBC.
The decision to expel him is expected to be formally announced by party chairman Eric Pickles after a meeting of the Conservative Party board.
The move is thought to have had the full backing of Tory leader David Cameron.
A party statement said: "Eric Pickles, Conservative Party chairman, has confirmed that the Board of the Conservative Party intend to expel Stuart Wheeler due to his support for another party.
"As a precursor to expulsion he has been formally suspended and has 28 days in which to appeal."
Mr Wheeler had told the News of the World newspaper that "the European Union is doing so much damage to our economy and our way of life that I can no longer vote Conservative at the European elections".
He said he had been urged by friends to "work from within" to change the direction of the Conservative Party, but had decided that the current party leadership would not allow it.
"I think the leadership very much makes up its mind without regard to others, other than a few people at the very top," he said.
"I think that more than half the shadow cabinet are more Eurosceptic than the leadership and would favour a tougher line on Europe."
UKIP leader Nigel Farage said he was delighted with Mr Wheeler's donation.
The decision to expel Mr Wheeler represented "a quick u-turn in 24 hours" for the Tories, who had previously said there were no plans to expel him, BBC political correspondent Reeta Chakrabarti added.
"They've clearly decided that the prospect of Stuart Wheeler actively funding candidates who are going to stand against Tory candidates in European elections was really too much to stomach," our correspondent added.