The Society of St Pius X, a breakaway order of the Roman Catholic Church, announced that it had expelled Bishop Richard Williamson, 72, for "refusing to show respect and obedience deserved by his legitimate superiors".
The order was founded in 1970 to distance itself from the modernising reforms adopted by the Church during the Second Vatican Council in the 1960s.
Williamson was consecrated as a bishop in the order by its founder, archbishop Marcel Lefebvre in Switzerland in 1988, against the orders of Pope John Paul II, who excommunicated the Briton and three others.
But in an attempt to bring the order back into the fold, Benedict XVI ended the maverick bishop's 20-year excommunication in January 2009.
A scandal erupted, however, when it emerged that just three days before, Bishop Williamson had claimed in a Swedish television interview that the Nazis did not use gas chambers and killed no more than 300,000 Jews.
The Vatican claimed that it had not known about Bishop Williamson's extreme anti-Semitic beliefs, despite the fact that they could easily be found on the internet.
The affair turned into a major public relations disaster, attracting criticism from Jewish groups, Catholic leaders and German Chancellor Angela Merkel.
A month after the interview went to air, the traditionalist order partially sanctioned Bishop Williamson by removing him from his position as the head of a seminary near Buenos Aires, Argentina.
His total expulsion appeared to be a sign that the Society of Saint Pius X wanted to finally draw a line under the scandal in the hope of reviving efforts to heal the split with the mainstream Catholic Church.
Williamson, who was born in Bucks and educated at Winchester College and Cambridge, opposes the rapprochement with the Vatican.
"Monsignor Richard Williamson, having distanced himself from the leadership and the government of the Saint Pius X Society over a period of several years and refusing to show respect and obedience deserved by his legitimate superiors, has been declared excluded," the fraternity said in a statement. "This is a painful decision."
Williamson was put on trial in Germany for publicly denying the Holocaust.
He was found guilty of the charge in two separate trials but the case was eventually thrown out in February for procedural reasons, with a higher court saying it was not clear how his remarks came under German jurisdiction.
