Nazir Ahmed of the House of Lords denied he offered a bounty for the two men -- as reported by Pakistan's Express Tribune newspaper -- at a conference Friday in Haripur, Pakistan.
The newspaper said his comment came in response to a U.S. offer of a $10 million reward for information leading to the arrest or conviction of Hafeez Mohammed Saeed, the founder of the Lashkar-e-Toiba group, who is suspected of orchestrating the 2008 Mumbai attacks that killed 166 people, including six American citizens.
"If the U.S. can announce a reward of $10 million for the [capture] of Hafiz Saeed, I can announce a bounty of [about $15.9 million for the capture of] President Obama and his predecessor, George Bush," the Express Tribune quoted Ahmed as saying.
Ahmed, a Muslim who was born in Pakistan, is reported to have said he would come up with the bounty even if he had to sell assets, including his house.
Ahmed denied the comments, Britain's Telegraph reported, saying: "I never said those words. I did not offer a bounty."
He said "war crimes" had been committed in Iraq and Afghanistan and that George W. Bush as well as former British Prime Minister Tony Blair "have been involved in illegal wars and should be brought to justice."
Ahmed said anyone suspected of terrorism should be brought to justice.
A Labor Party spokesman said: "We have suspended Lord Ahmed pending investigation. If these comments are accurate, we utterly condemn these remarks, which are totally unacceptable."