● Gardiner said it was "ridiculous" that the party had to adopt a zero-tolerance approach to anti-semitism, saying MPs who apologised for past remarks should not face further action.
Dexter's testimony is the most recent snapshot of the turmoil in Labour, coming after several whistleblowers told BBC Panorama about the party's failure to tackle the problem until mid-2018.
Dexter handed in his notice in April. Afterwards, he said, party staff accused him of breaching data rules and marched him out of the office: "I still don't know what happened. I asked for details but they didn't provide any."
He has asked Labour's HR department why he was not allowed to serve out the remainder of his contract, but the party has not responded. Union staff have since made inquiries about his treatment.
Much of today's testimony centres on the conduct of Thomas Gardiner, the chief of Labour's governance and legal unit since June 2018.
He was revealed earlier this year to have blocked the suspension of a woman who had posted an image of the Statue of Liberty being smothered by an alien with the Star of David on its back.
Dexter says Gardiner had the final say on "all anti-semitism complaints and seemed to take advice from Corbyn's team before making decisions. "It was obvious and certainly accepted by me and a couple of other staff members that Thomas was probably getting direction from LOTO [leader of the opposition's office] on lots of decisions," leading to dysfunction and months-long delays.
Dexter said the complaints team was explicitly banned from executing its traditional role of recommending whether to suspend those accused of anti-semitism. "They had one person who's making the decisions unilaterally without any apparent understanding or necessary training for that," he said. "It certainly felt like a massive misjudgement and an error."
By the time he left, Dexter said, there was a backlog of hundreds of complaints and severe understaffing: "The team was gutted. I was the sole member of the complaints team but there was no urgency to move cases on or get more staff."
He said Gardiner's claim that it was "ridiculous" Labour had adopted a zero-tolerance approach towards anti-semitism came in February after a Labour MP said that Israel might have funded the Independent Group of rebel MPs.
"Thomas walked over and said quite openly across the team, 'This is why it would be ridiculous for us to have a zero- tolerance approach when someone comes out and says sorry, even though they have said something bad, that we should be obliged to take any action'," Dexter said.
He said the job had left him traumatised and depressed: "It puts you in a very dark place. You feel guilty. Very angry, very sad, unable to engage with people personally. Relationships broke down with friends and family; you don't feel you can be a positive person."
Asked about Labour's claims that only a minority of members are anti-semitic, he said: "That's not an adequate response, it's there, it's prevalent, it's making a minority community feel very distressed and disturbed and affecting their ability to be in the party and possibly the country should we get into power."
A Labour spokesman said: "Seconded staff categorically did not take over any particular aspect of complaints work." He said the person who posted about Jewish MPs turned out to be someone who "is not and was not" a member.
On claims that Gardiner went to Corbyn's office before making decisions, he said: "This is entirely baseless."
On alleged remarks about zero tolerance, he said: "This conversation categorically did not take place and Mr Gardiner said no such thing. Labour takes all complaints of anti-semitism extremely seriously."
Corbyn's 27-year-old son, Seb, who works for the shadow chancellor, John McDonnell, is said to have told his father that the tiny left-wing clique led by his strategy director, Seumas Milne, has "too much power" in the operation, according to The Mail on Sunday.
