Allegations that corruption in the West Midlands Labour Party lay behind the deselection of Birmingham council candidates were described in court yesterday as "absurd".

Gavin Millar QC told a hearing into an election petition brought in the Aston ward that there was no truth in claims that Labour operated an "institutional policy" whereby false allegations were invented as a device to suspend and then sack candidates who had fallen out of favour with the party hierarchy.

The claim is at the centre of a claim by petitioners that a Labour smear campaign in the 2007 council elections was responsible for the failure of Liberal Democrat candidate Saeed Aehmed to win in Aston.

Mr Aehmed was selected as the Labour candidate for Aston in 2002 but forced out by party officials over allegations about fraudulent applications for disability grants. When Mr Aehmed stood as Lib Dem candidate in the 2007 elections, claims about the grant applications and false allegations that he had been arrested for postal vote fraud were made by Labour supporters, it is claimed. On the second day of the trial last week, Graham Brodie, representing Mr Aehmed, invited the judge to consider "the matter of corruption within the West Midlands Labour Party".

Yesterday, Mr Millar, said an "entirely accurate" report about Mr Brodie's remarks in The Birmingham Post would be taken by most readers to suggest Labour officials were guilty of bribery or inducement for reward.

Mr Millar added: "The concern we have is perhaps obvious. The promised evidence of corruption doesn't seem to exist. There is no suggestion of inducement or reward, no suggestion of bribery.

"It is a matter that has caused great concern to the senior officials of the West Midlands Labour Party and they are entitled to know properly if it is being said they engaged in corruption and what the particulars of that are."

Accusing Mr Brodie of "playing fast and lose with a dangerous word", Mr Millar said counsel for the petitioners had been attempting to grab a headline and had not produced any evidence to back his assertion. It was absurd to suggest that Labour candidates were habitually suspended and deselected, he added.

Mr Brodie told the court his remarks meant the system operated by Labour officials was corrupt, rather than the officials themselves.

He agreed with a summary by the judge, Timothy Straker QC, sitting as Elections Commissioner, who said there was no suggestion Labour officials were seeking or taking favours. Mr Brodie added: "I am saying there is a series of instances which we have set out in our evidence of individuals who wish to stand as officially endorsed Labour candidates having allegations made against them as a device.

"You may accept that evidence. You may not accept that evidence. But it is our case that these people are entitled to the proper operation of the Labour Party system and that system did not operate properly as far as they were concerned."

A Labour spokeswoman said: "Over the past five years thousands of candidates have been selected and fielded by the West Midlands Labour Party. And of its entire membership in the West Midlands less than 30 have been suspended during that time.

"We feel completely and utterly confident that there will be insufficient evidence to support what can only be described as ridiculous and ludicrous claims."