Nick Clegg has waged war on the party's peers who support Lord Rennard, accusing them of defying "basic decency" if they readmit him without an apology.
Clegg attempted to avert the leadership crisis prompted by the row, saying Rennard should apologise to the women who claim he sexually harassed them, warning the under-fire peer: "No apology, no whip."
It came after a senior Lib Dem dismissed the allegations against Rennard, saying they are like "an Italian man pinching a woman's bottom".
MEP Chris Davies compared the peer's treatment to "the Salem witch trials".
Rennard plans to take up his place in the Upper House and his legal adviser threatens legal action if the whip is not reinstated.
He strenuously denies the allegations against him and has refused to apologise, after an inquiry by senior barrister Alistair Webster QC found that the women's claims were credible but could not be proved beyond reasonable doubt.
Speaking to ITV on Monday morning, Clegg said that if the whip was restored to the party's former chief executive without any apology, it would be "in defiance" of his authority. And he warned: "Clearly, if it were to happen, matters would not rest there."
The Deputy Prime Minister told ITV1's Daybreak: "What is on the line here is basic decency. When you have caused offence and distress to other people, even if it doesn't end up in the hands of the police or the courts, basic decency suggests you should apologise,
"That is what Lord Rennard has been asked to do after a formal investigation and a process - recommended by an independent QC. I really think he needs to do that.
"I don't think it is appropriate that he should be sitting in the House of Lords if he hasn't provided that apology - no apology, no whip, if you like.
"That is my view, it is the view of many party members and it is the view of the person who did that formal inquiry on the party's behalf. I very much hope that he - and other colleagues of his in the House of Lords - will listen to that and make sure that the apology is issued, so that people who have been subjected to behaviour which did cause them distress at least get that from him."
Clegg said that if the Lib Dem peers voted to readmit Rennard, "clearly it would be in defiance of basic decency, it would be in defiance of what the independent formal processes have recommended, in defiance of me and in defiance of of the president of the party".
He added: "That is why I hope it will not happen this afternoon. Clearly if it were to happen, matters would not rest there."
But Lord Rennard won the backing of Lib Dem Euro MP Davies, who played down the allegations against the peer and attacked Mr Clegg's handling of the row.
Davies told BBC Radio 4's Westminster Hour: "This isn't Jimmy Savile, it is touching someone's leg six years ago, at a meeting, through clothing.
"This is the equivalent of a few years ago, an Italian man pinching a woman's bottom. How much more must this man be made to suffer through the media condemnation that comes out day after day fed by the party leadership?"
Davies added: "The whole thing has become like the Salem witch trials... A good man has been publicly destroyed through the media with the apparent support of Nick Clegg. It is completely out of proportion, nonsense and outrageous."