The party suspended Ghosh with immediate effect pending enquiry.
Ghosh, who did not attend the assembly during the day, sat on the dharna alleging corruption regarding a drinking water project at Suri in Birbhum district.
He said during the past two-and-half years he had taken up the issue with the party and also written to state Urban Development Minister Firhad Hakim and Chief Minister Mamata Baenrjee but "no action was taken".
Announcing action against the MLA, TMC secretary general and a member of its disciplinary committee Partha Chatterjee announced that Ghosh has been suspended with immediate effect pending enquiry.
Ghosh's act was "politically motivated", he said, adding that he resorted it without discussing in the party. "We know at which party's instigation he has done it".
Leader of opposition Surya Kanta Mishra raised the issue in the assembly demanding statement from the government as to why a member of the ruling party is staging demonstration outside the House.
Speaker Biman Bandopadhyay told the members that he knew about Ghosh's demonstration and had requested him to come to his chamber but he refused.
Urban Development Minister Firhad Hakim told the House that Ghosh had written to the chief minister who had asked him (minister) to enquire into the allegation.
Departmental enquiry order was also given, Hakim said, adding that process was already on to start the drinking water project.
There were charges against the MLA which would also be probed, he added.
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