Labour leader Ed Miliband has demanded David Cameron throw Dudley North candidate Afzal Amin out of the Conservative Party.
Mr Amin is accused of scheming with the English Defence League to announce an inflammatory march against a new “mega-mosque” in the seat of Dudley North and then take the credit for defusing the tensions.
He has insisted he will mount a “robust defence” of his actions in attempting to “stage-manage” a row with the far-right English Defence League in order to boost his electoral chances in the constituency.
But Mr Miliband said: “These are shocking allegations when you have a Conservative candidate saying that he is going to be an ‘unshakeable ally’ of the English Defence League.
“There is only one course of action for David Cameron: he should end the dither, end the delay and kick this man out of his party.
“We cannot have these sort of people standing for mainstream parties in British politics.”
Mr Amin, who claims he was the target of a sting operation, is to face a disciplinary hearing and reports indicate he could be sacked as the Tory candidate in the target seat within days.
The would-be MP was reportedly filmed by former EDL leader Tommy Robinson, who blew the whistle on the plot because he objected to being used as a pawn.
The candidate, said to have been described on his Tory Party website as a former Army education officer to Princes William and Harry, outlined his plan to Mr Robinson and current EDL chairman Steve Eddowes at an Indian restaurant in Birmingham on Monday.
The Mail on Sunday reported that the 40-year-old allegedly suggested EDL members could be paid to canvass on his behalf, and floated the idea of a phony protest - just weeks after a real demonstration in Dudley by 600 EDL supporters led to 30 arrests.
Mr Amin told the BBC Radio 4 Today programme what was suggested was “very normal conflict resolution, confidence-building measures”.
“If people do announce that they are going to do an action, and other people disagree with it, then they sit together and they resolve their differences and the action is then stopped; then this helps the communities feel that ‘Yes, on the other side there is a working partner we can work with’.
“That’s what we were trying to stage-manage.”
He insisted that the second march was proposed by Mr Robinson in a meeting at the Toby Carvery in Dudley.
“There is no way that I would have the confidence to propose such a manoeuvre to the EDL leadership.
“He is the one that proposed, absolutely, that we would do this march and then we would negotiate a way out of it.
“When he first came to me he presented himself in tears, saying that he wanted to see an improved Britain.
“I didn’t realise this was the start of a year-long sting operation. That’s really what I’ve been subject to here.”
Mr Amin said he would make his case to the Conservative Party at tomorrow’s hearing.
“I want to make a robust defence of my actions and I want to assure that party that I am a loyal party member and a party supporter and I look forward to seeing a Conservative victory in May and David Cameron returned as Prime Minister,” he said.
Labour’s Ian Austin held Dudley North in 2010 with a majority of just 649 and a decision to sack Mr Amin would leave the Tory campaign to win the seat in disarray.
Asked during a visit to the Science Museum in London whether Mr Amin should stand down, Chancellor George Osborne said: “He has been suspended pending the investigation from the Conservative Party, so that investigation is now taking place very quickly and of course we await the results.”