Labour has become only the second political party to be investigated by the Equalities Watchdog – after the British National Party – signalling a major blow to Jeremy Corbyn in a week that saw Labour perform poorly in the European elections.

The EHRC says it is opening an investigation into Labour under section 20 of the Equality Act 2006 after preliminary research carried out since March.

The probe will determine whether the party, its employees or its “agents” unlawfully discriminated against, harassed or victimised Jews.

Under the investigation, the EHRC will have full statutory powers to demand access to documents, emails, WhatsApp messages and witnesses as part of the investigation.

It comes on the same day as Tony Blair’s former spin doctor Alastair Campbell was expelled from Labour after voting for the Liberal Democrats at the European elections last week.

He wrote on Twitter referring to the speed with which he had been expelled, “Hard not to point out difference in the way anti-Semitism cases have been handled.”

Deputy Labour leader Tom Watson said: “I have been warning both privately and publicly that we risked a vortex of shame if we didn’t do everything in our power to root out anti-Semitism in our ranks.

“The decision of the Equality and Human Rights Commission to launch a statutory investigation into Labour shows they have reasonable suspicion that the party has unlawfully discriminated against, harassed or victimised people because they are Jewish.

“I feel utter shame that this investigation is necessary but I truly hope that it will provide the means to finally root out anti-Jewish racism from our party once and for all.”

Louise Ellman MP, president of the Jewish Labour Movement, said: “I welcome this decision. It’s a disgrace that it has come to this.

“I hope the EHRC will conduct a thorough investigation to expose what has been happening in the Labour Party.”

Wes Streeting, co-chairman of the all-party parliamentary group on anti-Semitism, said: “This is a day of great shame for the Labour Party and a damning indictment on the failure of our leadership to respond to repeated warnings about the nature of our problem and what needs to be done to address it.”

Labour denies it has acted unlawfully or that it does not handle anti-Semitism complaints robustly.

The last party to be investigated by the EHRC was the British National Party in 2010 over its whites-only membership rules.

Dame Margaret Hodge tweeted: “Nine years ago I defeated fascist Nick Griffin at the ballot box. His racist party was investigated by the EHRC that same year.

“Now, after four years calling out Labour anti-Semitism, the EHRC will investigate Labour as well. For Corbyn to have led us down this path is unforgivable.”

The statutory investigation gives the EHRC the power to demand internal communications, such as text messages and emails, and take action against the party through the courts.

The commission, which was created by a Labour government in 2006, was given tough powers designed to force organisations to comply with equality and human rights laws.

It will look into whether anyone has acted illegally within Labour and whether steps were taken to implement the reports on anti-Semitism by Baroness Royall, the home affairs select committee and shadow attorney general Baroness Chakrabarti.

They will also investigate whether the Labour rule book and the party’s investigatory and disciplinary processes allow it to properly deal with complaints of discrimination and whether appropriate punishments have been applied.

A Labour Party spokesman said: “We reject any suggestion that the party does not handle anti-Semitism complaints fairly and robustly, or that the party has acted unlawfully, and we will continue to cooperate fully with the EHRC.”