10 million pound bounty offered for the capture of President Obama - . Reuters/Kevin Lamarque

A controversial British peer of Pakistani origin, who allegedly announced a £10-million bounty for the capture of US President Barack Obama and his predecessor George Bush, has been suspended from the UK's Labor Party.

However, Lord Nazir Ahmed denied the allegation saying that his remarks on Islam and Prophet was misinterpreted.  

Lord Ahmed, who became first Muslim life peer in 1998, reportedly offered the cash price at a reception function at Haripur, in North-West Pakistan, the Daily Telegraph reported.  

According to a Pakistani Express Tribune report, Ahmed made the bounty remark in retaliation to the US offer of $10-million reward for the capture of Hafiz Muhammad Saeed. Saeed is the founder of extreme terrorist group Lashkar-e-Taiba (LeT). The violent group is blamed for deadly attacks in India and is wanted by India for the 2008 Mumbai terror attacks that killed 166 people.

Reacting to the US bounty, Ahmed said: If the US can announce a reward of $10m for the captor of Hafiz Saeed, I can announce a bounty of £10m on President Obama and his predecessor George Bush, Express Tribune report said.  He added that he would sell his house to fund, it if needed.

The Labor Party suspended him immediately, pending an investigation, The Guardian reported.

Confirming the suspension and condemning the remarks, Labor Party a spokeswoman said that if the allegation was true, then they are unacceptable, when the international community is rightly doing all in its power to seek justice for the victims of the Mumbai bombings and halt terrorism, the Guardian reported.

However, speaking from Pakistan, Ahmed has refuted the charges and said that he never said those words and his speech was misinterpreted. He said that he spoke about prosecuting Bush and UK Prime Minister Tony Blair on war crimes.  He said that he didn't think what he said was wrong and would counter the allegations and fight the suspension, according to an RT.com report.