Jim Deen, who has previously stood as a Parliamentary candidate, was elected to the Central ward earlier this year.
Beccy Cooper, Labour group leader at WBC, confirmed Cllr Deen had been placed under administrative suspension pending the outcome of an internal party investigation.
She added: “The local Labour Party will fully cooperate with the investigation, but at this time will add no further comment to avoid prejudice of any outcome. The Labour group will continue to work hard for the people of Worthing.”
Cllr Deen told the Herald he would not be commenting on his suspension other than to say he would contest it provided he had confidence that the process would not affect a personal matter.