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Blackpool South MP Scott Benton, who was caught in a lobbying scandal, has lost his appeal against a 35-day suspension from Parliament.
MPs will now vote whether to trigger a recall petition that could force a by-election.
Mr Benton was caught breaching Commons rules by offering to lobby ministers and table parliamentary questions on behalf of gambling investors.
He was elected as a Conservative in 2019 with a 3,690 majority.
The MP, who now sits as an independent, appealed against both the finding and the suspension, but a report by an independent panel has upheld the Standards Committee’s original decision, saying there had been “no procedural flaw” in the process.
The panel also described Mr Benton’s arguments as “misconceived or erroneous”, finding the sanction was “neither unreasonable nor disproportionate”.
The finding means MPs will vote on whether to implement the recommended suspension which, if supported, would trigger a recall petition and a potential by-election in Mr Benton’s seat.
It raises the prospect of another challenging poll for Prime Minister Rishi Sunak after losses in Wellingborough and Kingswood last week.
Voters will have six weeks to register their support for Mr Benton’s removal – 10% is the threshold needed to trigger a by-election.
Labour has urged Mr Benton to resign as an MP completely.
Jonathan Ashworth, shadow paymaster general, said: “Scott Benton should do the decent thing and resign, saving the people of Blackpool South a lengthy recall petition that would leave them without the representation they deserve.
“This is yet another by-election caused by Tory scandal. Britain deserves better than this carousel of Conservative chaos.”
Analysis – Ellis Palmer, public policy reporter, BBC Lancashire
A Conservative seat from 1945 until 1997, Blackpool South went red between 1997 and 2019.
Scott Benton then snatched the seaside seat from long-serving Labour MP Gordon Marsden. But now it’s up for grabs again – with a majority of 3,690.
Given recent by-election results in less favourable conditions for the Labour Party, they must fancy their chances if one is called here.
The path to power for Labour at the next general election could be through winning back seats like these, so the party will mount a strong campaign, with its candidate Chris Webb already primed.
Residents here have been hit by the long-term decline of seaside towns, and many in 2019 were enthused by Boris Johnson’s Levelling Up policies and the hope that his government could help turn the tide.
Now Rishi Sunak could faces a strong electoral test in an archetypal Blue Wall seat – and it might be tougher than a stick of rock.
A Blackpool South by-election would be the fourth this year, while defeat would be the 11th time the government had lost a seat since the start of the current Parliament in 2019.Any poll would be unlikely to occur until the end of April or the beginning of May.
Mr Benton had claimed the investigation by the Commons Standards Commissioner was “materially flawed”, alleging the commissioner “drastically over-reached” and “arrived at conclusions which were unsupported by any adequate evidence”.
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