Luke Smith was elected onto Burnley Council in May 2003

Luke Smith, 21, is alleged to have been involved in a "drink related" incident at the party's recent "Red, White and Blue" festival in Sawley on Saturday.

Three other people and a security guard are also believed to have been involved.

The police were informed but no action was taken.

BNP leader Nick Griffin is heading the investigation into Councillor Smith, who represents the Lanehead ward and is one of eight BNP councillors in the town.

The leader of the local BNP group, Len Starr, said Councillor Smith would be suspended from the party until an investigation had been completed.

Football ground ban

He said: "There was an incident that happened over the course of the weekend which was what I would describe as unsavoury.

"We obviously need to investigate that to establish exactly what did happen and take whatever firm action is required on the completion of the investigations."

He added: "Luke Smith is suspended as far as the party is concerned, he will not represent us in the council chamber and on completion of this investigation we will take appropriate action.

"If the allegations that have been made are proven to be true, I would say the BNP do not want people representing them that are tainted in any way, particularly with things which are involving unsavoury behaviour."

Councillor Smith declined to comment but said he would be issuing a statement on Tuesday.