Sir David Garrard accused the party leadership of failing in its response to the “most blatant acts of anti-Semitism”.
He has donated about £1.5m to Labour since 2003 – but Sir David claimed the party he had supported “no longer exists”.
Labour’s current leadership had in effect “supported and endorsed” acts of anti-Semitism, Sir David told The Observer.
“As one of the former leading political and financial supporters of the Labour Party, of which I was a member for so many decades, I no longer feel any affinity with, or connection to, what it seems to have become,” he said.
“I have watched with dismay and foreboding the manner in which the leadership has, in my view, over the last two years, conducted itself.”
Sir David said the party had “failed to expel many of those who have engaged in the grossest derogatory fantasies about Jewish/Zionist conspiracies – and Jewish characterisations and accusations which conjure up the very kind of antisemitic attacks that led to such unbearable consequences for innocent millions in the past”.
“So there no longer exists a party which even pretends to maintain and promote the principles and the integrity of what always was, to me, the Labour party,” he added.
“On the contrary, I have been witnessing, since Mr Corbyn became leader, a philosophical and a political policy which espouses, in nearly every respect, the very antithesis of the great party under whose reputation, and under whose flag, it now seeks to fly and where so many other Jews were once so proud to stand.”
Labour leader Jeremy Corbyn has said there is a “need to do better” within the party, but promised Jewish people he is their “ally” in the fight against anti-Semitism.
Meanwhile, The Sunday Times reports 12 senior members of staff working for Mr Corbyn and shadow chancellor John McDonnell were in social media groups that contained anti-Semitic and violent comments.
The newspaper looked into 20 of the biggest pro-Corbyn groups on Facebook, with around 400,000 members, and found attacks on Jewish people, including Holocaust denial.
According to its report, more than 2,000 racist, anti-Semitic, misogynist, violent and abusive messages were uncovered by working with whistleblowers who were able to gain access to the restricted membership groups.
A Labour source said the sites regularly received hundreds of postings every day, most of which were perfectly innocent messages about party policies or events.
The source added that many of the staff concerned were either no longer active on Facebook or were unaware they were members of the groups and had not seen the content highlighted by the paper.
“These groups are not run by the Labour Party or officially connected to the party in any way,” a party spokesman said.
“The Labour Party is committed to challenging and campaigning against anti-Semitism in all its forms.
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“These are fully investigated in line with our rules and procedures and any appropriate disciplinary action taken.”
It comes after Corbyn ally Christine Shawcroft resigned from her senior post on the party’s National Executive Committee, having already quit as chairwoman of Labour’s disputes panel after it emerged she had opposed the suspension of a candidate accused of Holocaust denial.