Lord Ahmed of Rotherham apparently said that the price put on the head of Hafiz Muhammed Saeed was an “insult to all Muslims”.

Pakistani-born Ahmed – Britain’s first Muslim peer – was quoted by Pakistan’s Express Tribune newspaper as saying that the US president had “challenged the dignity of the Muslim Ummah (or community)” while at a reception in Haripur.

A Labour spokesman confirmed: “We have suspended Lord Ahmed pending investigation. If these comments are accurate we utterly condemn these remarks which are totally unacceptable.”

However, it is understood that Ahmed denies making the comments and has complained that Labour Party chiefs did not consult him before announcing his suspension.

He did, however, reportedly admit to telling the meeting in Haripur that George Bush and Tony Blair should be prosecuted for war crimes.

The Express Tribune reported that Lord Ahmed said: “If the US can announce a reward of $10m for the captor of Hafiz Saeed, I can announce a bounty of £10m on President Obama and his predecessor George Bush,” adding that he would sell his house to fund the bounty if necessary.

Picture: Getty