David Ward was suspended by the party for several weeks last year after making a string of controversial comments about Israel and Jews,
Now his future is once again in doubt after he used social media to give his verdict on the violence currently rocking the Middle East.
“The big question is - if I lived in Gaza would I fire a rocket? - probably yes,” he posted on Twitter.
The party said it “utterly condemned” the remarks which “are not representative of the Liberal Democrats”.
“Nick Clegg has been at the forefront of calling for peace in Israel and Gaza,” a spokesman said in a statement.
“The party takes this matter very seriously and will treat it as a disciplinary issue.”
Conservative Party chairman Grant Shapps called on the MP to withdraw the remark, which Labour said was a “vile” comment by a “desperate” MP.
“Appalling: No MP should Tweet what’s essentially incitement to violence,” Mr Shapps said.
“Mr Ward must withdraw now. Completely irresponsible.”
Another Lib Dem MP, Stephen Williams, distanced himself from his party colleague’s views.
“I think Israel’s response is heavy handed but Hamas rocket firing is deplorable too,” he told him.
“I’ve seen school bomb shelters in S Israel.”
Mr Ward, the MP for Bradford East, had the party whip restored in September after serving a suspension over a series of clashes with the Lib Dem hierarchy over his views on Israel and its treatment of the Palestinians.
The final straw for leadership was a posting in July last year questioning the future existence of the state of Israel which the party said broke a previous agreement to use “proportionate and precise’’ language when commenting on the issue.
Mr Ward condemned that ruling as ‘’disproportionate’’ saying such views were widely shared.
A Labour spokesman said: “At a time when all sides should be working for a ceasefire and a peaceful settlement, it defies belief that a Liberal Democrat MP should tweet something so vile and irresponsible.
“Nick Clegg must act immediately to disassociate his party from this comment.”
Former Liberal Democrat MEP Edward McMillan-Scott had to apologise after he waded into the row in Mr Ward’s defence with a Twitter attack on the Board of Deputies of British Jews and editor of the Jewish Chronicle Stephen Pollard.
Mr McMillan-Scott, a former vice-president of the European Parliament who defected from the Conservatives to the Lib Dems in 2010 before losing his seat earlier this year, wrote: “David Ward can look after himself. The @BoardofDeputies is a frightful bag of disputatious Jews and the editor of the @JewishChron is a prat.”
His comment sparked a storm on Twitter, with some posts accusing him of anti-semitism - a charge he denied.
He later used Twitter to apologise, saying: “I apol to @BoardofDeputies altho they didn’t when I was smeared by @stephenpollard in 2009 at behest of #Coulson. D Tel did tho. I’m not a/S” (anti-semitic).