A report into allegations of anti-Semitism in Labour found the party was “responsible for unlawful acts of harassment and discrimination”.
The Equality and Human Rights Commission (EHRC) said it “identified serious failings” in the party’s leadership in addressing anti-Semitism.
It also said the party had “inadequate processes” for handling complaints.
The watchdog gave the party an unlawful act notice, meaning it has to publish an action plan within six weeks.
The EHRC launched its investigation in May last year after receiving a number of complaints from organisations and individuals, including the Jewish Labour Movement.
In its report, the watchdog found the party responsible for three breaches of the Equality Act, namely:
In a statement, it said: “The equality body’s analysis points to a culture within the party which, at best, did not do enough to prevent anti-Semitism and, at worst, could be seen to accept it.”