Neville Sanders, who has already been suspended by the Conservative Party, was not present to witness his demise and replacement by deputy Ben Franklin, after three years as leader.
Despite its majority, a number of Tories sided with Labour and the other opposition parties to carry the vote by a margin of 13.
Mr Sanders remains under investigation by the Conservative Party and the Standards Board for England.
The paper contacted him after he returned a letter sent to Peterborough from Carrickfergus BC, Co Antrim, which had requested support from British councils for an inquiry into the suicide of a Royal Irish Regiment soldier.
He reportedly scribbled on it: 'Members of the armed forces do get killed, be it by accident or design, that is what they are paid for.'
But he remained defiant after the vote, saying: 'What you see is what you get with me. I'm not one of these people who do things in a politically correct manner.'
Following his remarks, Democratic Unionist Party MP Gregory Campbell tabled an early day motion in the House of Commons calling for politicians to recognise the potential of offhand comments to cause offence to victims of the troubles.
Mr Sanders remains a councillor but the standards board is investigating two complaints by members, relating to four breaches of the code of conduct.
These are failing to promote equality, discriminating unlawfully, failing to treat others with respect, and bringing the office and authority into disrepute.