Labor legislator Paul Flynn told a parliamentary committee last week that two constituents had complained that ambassador Matthew Gould "was serving the interests of the Israeli government."
Flynn added: "I do not normally fall for conspiracy theories, but the ambassador has proclaimed himself to be a Zionist."
The Jewish Chronicle newspaper later quoted Flynn as saying the ambassador to Israel should be "someone with roots in the U.K. [who] can't be accused of having Jewish loyalty."
Fellow lawmakers condemned the remarks.
Independent legislator Denis MacShane called Thursday for the government to show "we do not have a religious bar on diplomatic service, we do not say Jews can't serve in Israel [or] Catholics can't serve in Catholic countries."
George Young, the leader of the House of Commons, said the Foreign Office was "an equal opportunities employer."
"It would be inconceivable it would apply any sort of prejudice of the type you have referred to in deciding who should be our ambassador in any part of the world," he said.
But Flynn called allegations of anti-Semitism "ludicrous."
He wrote on his blog Thursday that he was "a lifelong friend of Israel and Jewish causes."
"Never before in my long political life has such an accusation been made," he wrote. "But I have been accused of being too friendly to Israel on many occasions."