Former Labour leader Jeremy Corbyn will be readmitted to the party following a row over antisemitism complaints, Sky News understands.
It found after a lengthy investigation that Labour had been responsible for “unlawful acts of harassment and discrimination”.
In response, Mr Corbyn claimed “the scale of the problem” was “dramatically overstated for political reasons by our opponents inside and outside the party, as well as by much of the media”.
On Tuesday, a five-member disciplinary panel from Labour’s National Executive Committee met and decided Mr Corbyn should be reinstated.
Afterwards, he tweeted: “I am pleased to have been reinstated in the Labour Party and would like to thank party members, trade unionists and all who have offered solidarity.
“Our movement must now come together to oppose and defeat this deeply damaging Conservative government.”
But Sir Keir said it was a “painful day for the Jewish community” and the decision had caused “hurt” and “trauma”.
“I will not allow a focus on one individual to prevent us from doing the vital work of tackling antisemitism,” he tweeted.
“I stand by the commitments I made last month to accept the findings and the recommendations of the EHRC’s report in full.
“That must mean establishing an independent complaints process as soon as possible in the New Year.”
The panel’s decision sparked fury from the Jewish Labour Movement, which said it was “extraordinary”.
A spokesperson said the party appeared to have “expedited” Mr Corbyn’s case and that the committee set up to rule on his future was “factionally aligned” in support of him.
“Once again we find ourselves having to remind the Labour Party that Jeremy Corbyn is not the victim of Labour antisemitism – Jewish members are,” they added.
A group of Labour MPs have warned Sir Keir they may resign the whip if Mr Corbyn represents Labour in parliament again.
They are said to be furious and feel the decision to lift his suspension will undermine work done to rebuild bridges with the Jewish community.
Sir Keir has also been accused of “failing to stand up for British Jews” by Conservative Party chair Amanda Milling.
“He is sending a message that the shameful antisemitism of recent years should be allowed to continue,” she said.
Earlier, Mr Corbyn had tried to “clear up any confusion about what I had meant” in a bid to boost his chances of being readmitted to Labour.
He explained in a statement: “To be clear, concerns about antisemitism are neither ‘exaggerated’ nor ‘overstated’.
“The point I wished to make was that the vast majority of Labour Party members were and remain committed anti-racists deeply opposed to antisemitism.”
Several of Mr Corbyn’s left-wing allies who served in his shadow cabinet have been calling for his reinstatement, including Diane Abbott and John McDonnell.
Analysis: Starmer’s ‘under new leadership’ claim looks hollow now
By Jon Craig, chief political correspondent
Sir Keir Starmer and many other Labour MPs will be furious at this decision.
It is less than three weeks since the former leader was suspended for his defiant stand against the EHRC report that damned the party over antisemitism.
The panel’s controversial decision today makes Mr Corbyn’s suspension look like a feeble slap on the wrist.
Besides anger at the decision itself, there will be fury that the readmission has happened so quickly.
Sir Keir has been boasting that Labour is “under new leadership”. Really? That claim looks hollow now. Many despondent Labour MPs will be despairing that nothing has changed.
While Mr Corbyn’s left-wing allies, who have campaigned vigorously for his reinstatement, will publicly claim justice has been done, privately they will be laughing in his face.
Mr Corbyn’s apparent climbdown, just hours before the panel met, was condemned by Jewish groups as “a pathetic non-apology” and “a desperate attempt to have his suspension lifted”.
Well, it worked.
But the decision will unleash an almighty row in the party over antisemitism once again.
And Labour MPs will be distraught that just as the Tories were ripping each other apart over the Dominic Cummings/Lee Cain/Carrie Symonds soap opera, their party has shot itself in the foot over antisemitism again.