Christine Melnick failed to fully apologize for initially saying she did not order bureaucrats to invite immigration service workers to watch a debate, Selinger said. Instead, he said, she chose to blame others.
"In doing so, she has lost the confidence of myself and of caucus," the premier said at a news conference.
"My expectation as leader of the government and this party is that when you make a mistake, you take responsibility for it and make it right. Ms. Melnick has been given many opportunities to do that, but has not so far done so."
Selinger was joined by five of his 31 remaining caucus members as he made the announcement after a weekly meeting. He did not directly answer questions as to whether the entire caucus supported the decision.
"We had a very healthy discussion. The consensus view was that this was the correct decision at this time."
Melnick, who will sit as an Independent, said she expected to pay a price for speaking out against the premier and added she plans to run for re-election in 2016.
"I don't really need to be sitting at a cabinet table or a caucus table to be a New Democrat. It's just simply who I am," she said.
"I did what I knew was the right thing to do."
The controversy dates back to April 19, 2012, when Melnick — then the province's immigration minister — introduced a resolution in the legislature criticizing the federal government’s plan to take over some immigration programs run by the province.
The previous day, her assistant deputy minister Ben Rempel and other bureaucrats issued an email to government-funded immigrant service agencies telling them of the event and saying that staff should feel free to come — even if it meant taking the afternoon off. More than 400 people packed the public gallery and an overflow room.
The Tory Opposition immediately accused the government of politicizing the civil service and orchestrating a show of support for the government. It also said government-funded agencies and immigrants would feel pressured to obey.
Melnick told a legislature committee that no one had directed Rempel to send the invitations.
Nineteen months later, ombudsman Mel Holley revealed in a report that Melnick had in fact directed Rempel. Holley said the way the invitations were sent out "clearly gave rise to the perception of partisanship" in the civil service.
Melnick, who was one of three cabinet ministers dropped to the backbenches in a cabinet shuffle last October, said she had forgotten giving the order due to undiagnosed diabetes. She apologized for her misleading statement.
Melnick kept a low profile until a few days ago, when Selinger said he and his staff were never involved in the decision to send out the invitations.
She went public with detailed allegations that one of the premier's advisers had told her what to do and that the premier's press secretary later told her she would have to take the blame to protect the premier.
Melnick said she was "very disappointed" with Selinger and described the way she had been treated as "reprehensible."
Selinger denied all the accusations.
The Opposition reacted Tuesday by calling on the government to form a special committee of the legislature "to get to the bottom of the scandal."
"The moral fibre of this government is in question and Manitobans deserve answers from all those who have information about what happened," said Tory deputy leader Heather Stefanson.
Melnick's dismissal is the first time someone has been ousted from the NDP caucus since the party took power in 1999. It comes as the New Democrats have faced strong criticism over a sales tax increase last year, and as opinion polls suggest the party is trailing the Opposition Progressive Conservatives.
Selinger, who will speak to the NDP's annual convention this weekend, said he remains confident in party support for his leadership.
"The short answer is yes."
Melnick's dismissal was noticed on Parliament Hill. A message on Multiculturalism Minister Jason Kenney's twitter account said Melnick's 2012 criticism of the federal immigration changes were unfounded.
"Would be nice to hear the Manitoba govt acknowledge that the campaign of fear over our settlement changes was wrong," read one tweet.
"Manitobans were totally misled about impact of our changes to settlement services."
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