Mr McMillan-Scott used to lead the Tory MEPs' group
A senior Tory MEP has had the whip withdrawn after defying orders on the party's first day of work with its new "anti-federalist" group.
Edward McMillan-Scott stood against the new ECR group's official candidate, a Polish MEP, for one of the European Parliament vice presidencies, and won.
He had opposed the Tory decision to leave the main EPP centre-right group.
The BBC understands the Tories' Polish allies were furious and were placated by being handed the group's leadership.
Mr Cameron had long promised to remove Tory MEPs from the main European People's Party centre right grouping, saying its federalist views were at odds with Conservative policy.
But to access EU funding they had to be part of a group in the European Parliament with a minimum of 25 MEPs from at least seven states.
The Tories formed a new grouping last month - the European Conservatives and Reformists Group (ECRG) - made up of 55 MEPs from eight countries.
But as members of the ECRG took their seats on Tuesday at the start of a five-year term, Mr McMillan-Scott made clear he would be standing for the vice president post - even though he was not its official nominee.
In a statement the UK Tory group said he had had the whip withdrawn at that point and it was "not expected" he could remain part of the ECRG grouping.
"He was offered the opportunity to withdraw his name to avoid harming the reputation of the Conservative Party," it said.
"Despite discussions and attempts to achieve this end, he went ahead and confirmed his nomination when voting commenced.
"At that point as he had received prior warning of the consequences and the Conservative whip was withdrawn."
It was reported that Tory leader David Cameron had phoned Mr McMillan-Scott and asked him to respect a deal in which Polish MEP Michael Kaminski, part of the new ECR group, would get the vice presidency while Tory MEP leader Timothy Kirkhope would be voted in as chairman of the new group.
But on Wednesday it emerged that the chairmanship would go to an MEP from Poland's Law and Justice Party, after Mr Kirkhope reportedly agreed to stand aside.
Despite some very magnanimous words from Mr Kirkhope this morning supporting his new group leader, it must have been a bitter pill to swallow, given the work he had personally put in to set the group up in the first place
The Tories are the biggest party in the new grouping, with 26 MEPs of the total 55. Poland's Law and Justice Party is the second biggest with 15 MEPs.
The BBC's Europe reporter Dominic Hughes said the Tories had argued that the new grouping would give them a greater voice in Europe but now it was its Polish chairman who would get valuable guaranteed speaking time in debates. The Tories may also miss out on powerful committee chairmanships as a result, he added.
Mr McMillan-Scott, an MEP since 1984, dismissed suggestions he would return to the EPP grouping as an independent.
He said: "The public wants to see transparency and real democracy from their parliamentarians - in Brussels or Westminster.
"Standing as an independent candidate, for the values of democracy and human rights which I have worked to promote worldwide, I have made a start.
"Rather than withdrawing the whip, David Cameron should be pleased that a Tory is still at the top in Europe."
The Tories' decision to leave the main EPP group has been criticised by Labour and the Lib Dems - and some Tories.
Former Tory MEP Caroline Jackson said it was "stupid" and the party was swapping an alliance with Europe's biggest parties for "odds and sods".