• Tommy Sheridan and wife Gail. Picture: PA
Rosemary Byrne, 62, said Sheridan told the SSP executive meeting on November 9 2004 that the allegations were "untrue".
She also said the gathering turned into almost a "kangaroo court" once Sheridan left the meeting.
Previous Crown witnesses have told the trial at the High Court in Glasgow that Sheridan admitted visiting a sex club at the same meeting.
Mrs Byrne, a retired teacher, said she was asked to attend the gathering by party colleague Alan McCombes to discuss allegations surrounding Sheridan, adding: "I think he said they were of a sexual nature."
Asked what happened at the meeting, she said: "You denied that you had attended a sex club, you said that the allegations that had been floating around were untrue.
"One thing that you did say was that you had had an affair with Anvar Khan after you had come out of prison. I can't remember the dates but it was away back before you were married."
She told the court she was "absolutely positive" this was her recollection.
Sheridan and his wife Gail, both 46, deny lying under oath during his successful defamation action against the News of the World newspaper in 2006.
The action followed the newspaper's claims that the former Socialist MSP was an adulterer who visited swingers' clubs.
He won 200,000 in damages after the newspaper printed the allegations about his private life.
She told the court that Sheridan left before the end of the meeting and afterwards there was a lot more discussion.
She said: "There was a lot said, more allegations, a whole lot of very emotive things were said that were very, very discomforting. I didn't feel at all comfortable.
"It was almost like a kangaroo court without you present."
She told the jury that those present discussed the way forward if the allegations were printed in the News of the World, and whether it was appropriate for Sheridan to continue as convener of the party.
She said: "The talk was that it might perhaps be better to ask you to stand down as convener should these allegations come forward."
Mrs Byrne, who was an SSP MSP between 2003 and 2007, said that, in the days after the meeting, she discussed the matter with a number of people she was close to, including former party press officer Hugh Kerr.
Sheridan, who is defending himself, asked what she told them.
She answered: "I reassured them that you had not said that you had been at a sex club, which was the rumours, and I reassured them that you had denied ever being at the sex club."
Sheridan denies making false statements as a witness in the defamation action on July 21 2006.
His wife denies committing the same crime on July 31 2006 after being sworn in as a witness at the civil jury trial.