JEREMY CORBYN suffered utter humiliation last night as the party dropped all disciplinary action against veteran MP Margaret Hodge for labelling him a “racist”.

Facing a huge rebellion over the bitter anti-Semitism row, Labour said the investigation into the Dame was over.

A party spokesman explained the MP had “expressed regret” to the chief whip for the manner of her outburst last month.

But within minutes, she took to Twitter to say: “Just to be clear: there have been no apologies – from either side.”

She added: “After 55 years of Labour Party membership, going after me instead of addressing the issue was wrong.”

Dame Margaret branded Mr Corbyn an “anti-Semite and a racist” to his face last month after the party’s ruling body approved a watered down anti-Semitism code.

The MP – who lost family in the Holocaust – hired top lawyers Mischon de Reya after being suspended.

They threatened to sue Labour last week if the party continued with its “misguided step” of continuing its investigation.

The lawyers also warned they could take Jeremy Corbyn to court to prove he was an anti-Semite under the definition laid down by the International Holocaust Remembrance Alliance.

A source last night told The Sun: “Labour is inventing this apology line, she hasn’t apologised at all.”

Yesterday’s climbdown by the Labour Party came a day after deputy leader Tom Watson demanded the disciplinary action be dropped.

He warned in a Sunday newspaper that Labour faced “eternal shame” if it didn’t solve the anti-Semitism row threatening to split the party in two.

He also renewed calls for Labour’s ruling NEC to adopt the full IHRA code – instead of its diluted version which critics claim has dropped four examples of anti-Semitism. Furious Corbnynite activists called for his resignation. But ‘moderate’ MPs rallied to his defence.

And they demanded Mr Corbyn guarantee the selection of prominent Jewish Labour MPs such as Luciana Berger, Ruth Smeeth and Louise Ellman at the next Election.

ohn Mann MP told The Sun: “It’s no longer enough for Jeremy to say he will accept the international code of anti-Semitism. He has to go further and guarantee people like Luciana will not be deselected.”

Lawyers for Ms Hodge last night directly accused Labour of deliberately and “cynically” misleading the media over their climbdown.

In a letter, Mischon de Reya said Ms Hodge had spoken to chief whip Nick Brown two weeks ago band she “did not express regret in these words or any others”.

The letter said: “The basis on which you seek to explain this belated volte face is entirely disingenuous. You have entirely misrepresented our client’s discussions with the opposition chief whip in a cynical attempt to save face in your climb down.”

A hardcore group of Labour moderates have been holding secret summits for months at a luxury 12-acre holiday estate in Sussex to plot toppling Jeremy Corbyn, it emerged last night. Around 12 senior MPs have met at the luxury Fair Oak Farm in Sussex for at least two away days according to the Daily Express to plan taking "back the party".

They said the group would catch the 7.18pm train from Waterloo East on a Thursday evening to Stonegate before taking a seven-minute taxi ride to the posh £144 a night bed and breakfast estate.

It was claimed attendees included former leadership candidate Liz Kendall, former shadow cabinet members Chuka Umunna and Chris Leslie, and other senior MPs Stephen Kinnock, Gavin Shuker as well as former Labour MP now independent John Woodcock.