The 61-year-old Labour party MP was hit by newspaper allegations last year that he had paid male escorts.
The Goan-origin politician had issued a public apology to his wife and children at the time and stepped down as the head of the influential House of Commons' Home Affairs Committee.
The UK's Parliamentary Standards Commissioner Kathryn Hudson had opened an investigation to determine whether Vaz was guilty of a conflict of interest, as he was chair of the Home Affairs Committee's review of vice laws at the time of the allegations.
"Rt Hon Keith Vaz MP - Alleged breach of paragraphs 10 and 16 of the Code of Conduct - suspended for medical reasons," the website notes.
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The watchdog's probe under the parliamentary Code of Conduct also covers whether the former minister caused "significant damage" to the reputation of Parliament.
In December 2016, Scotland Yard had dropped an investigation into Vaz over alleged drug offences linked with the newspaper revelations around male escorts.
"During the investigation, new information was received and additional advice obtained from the CPS [Crown Prosecution Service], following which the MPS [Metropolitan Police Service] has made the decision to close the investigation with no person being charged," the Met Police had said in a statement.
He was also accused of encouraging others to use poppers, an illegal party drug.
Vaz has since returned to active political life, and was re-elected to one of the Labour party's key executive bodies
the National Executive Committee (NEC) as its Black Asian and Ethnic Minority (BAME) representative in August this year.
"I am looking forward to continuing the vital work that I have been carrying out in the position for the last decade," said the Labour MP from Leicester East.
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