The Jewish MP faced two motions of no-confidence in her from members of her constituency last week, prompting a furious backlash from a host of her colleagues.
The outrage led to the motions being withdrawn, while Mr Watson later wrote to General Secretary Jennie Formby demanding the constituency party be suspended.
In a letter he said it was clear Ms Berger - who has campaigned against anti-Semitism in the party - was being “bullied” and that local members were “bringing our party into disrepute".
Ms Formby later tweeted that "there was no constitutional basis" on which to suspend the local party as a whole.
But the deputy leader this morning confirmed on the BBC’s Andrew Marr Show that the party’s top brass were investigating individuals and that there were "grounds for suspension".
"[Ms Formby has] confirmed to me that she is investigating members in that constituency and actually I’ve had another complaint this evening that I need to follow up later today," he said.
"So it does seem to me that there are grounds for suspension.
"I can only repeat again: I think Luciana is being bullied and there are local members in Liverpool Wavertree responsible for that and others and that is unacceptable, and it is incumbent on political leaders to make sure that doesn’t happen."
One of the local party’s members faces an investigation by the party after it emerged he branded Ms Berger a "disruptive Zionist" on Facebook.
Elsewhere Shadow Health Secretary Jon Ashworth insisted Labour could “eradicate” anti-Semitism from its ranks - just days after Ms Formby told the Parliamentary Labour Party that the problem could not be ousted completely.
“I’m such a big fan of Luciana Berger," he told Sky News' Sophy Ridge on Sunday.
"She’s probably most persuasive campaigner on mental health issues for example, I work very closely with her.
“She’s stood up against anti-Semitism her whole political life, she’s got my full support.
"It’s clear we need to go further and faster in dealing with anti-Semitism in the Labour Party, one anti-Semite in the Labour Party is one too many.”
Meanwhile former Labour prime minister Tony Blair said the treatment of Ms Berger had been “shameful” as he backed Mr Watson’s initial call for the constituency party to be suspended.
“I think what Tom’s saying is absolutely right, I back him 100% on it,” he told the same programme.
“Can you imagine when I was leader of the Labour Party, having a conversation with me about whether anti-Semitism is in the Labour party or not? We wouldn’t even have that conversation.”
The now-dropped local motions against Ms Berger accused her of "continually using the media to criticise the man we all want to be Prime Minister" and said she had been "continually criticising our leader when she should be working for a general election and opposing the Tories".
Hitting back in a statement, the MP said: "Nothing will deter me from exposing anti-Semitism wherever it festers, including in the Labour Party where it is being wilfully ignored.
"My values remain the same as they did when I was first elected. I will not be distracted from fighting for the interests of my constituents."