Dot Watson, 80, said she was disgusted at the way she and other long-serving Labour councillors had been treated by the party.
Ms Walton, who has served for more than 40 years, failed the selection process which every potential Labour candidate for next year's local elections must undergo.
She said: 'I am a straightforward, honest person and I tell people what I think. I am disgusted with the way in which I and other long-standing councillors have been treated by the Labour Party.
The district Labour Party said it had politely asked councillor Walton to retire. A spokesman said: 'We asked Dot Walton to retire after 40 years as a Labour councillor because she was not able to do the job over the past four years.
'As a result of our actions, she has apparently discovered the Liberal Democrats - a sad end to a long career.'