Bill Duffin was found guilty, along with two other Brent Conservative members, as a result of his involvement in a planning application for a pub extension.
Leslie Winters stepped down before the ombudsman's report and David Tobert has already announced he will not fight next year's election.
The ombudsman found that the pub landlord had made a£2,000 donation to the local Conservative constituency party before planning permission was given and gave a further£2,000 24 hours after the application was granted.
The local Conservative Party took no action against the three, but London party official Bob Neil has since publicly asked Mr Duffin to step down at the next election.
Labour member John Duffy said: 'If [Mr Duffin] is unacceptable in 1998, why is he - along with Tobert - allowed to remain now?'
Brent Labour Party wrote to Conservative leader William Hague soon after his election in the summer and demanded action against the remaining two, as part of his stated 'drive against sleaze'.
Brent Tory group leader Bob Blackman said Mr Duffin had already been approved and selected as a candidate by the local party, and the final decision on his candidature would be made by his ward before March next year.