Arvind Kejriwal tendered the apology to former minister Bikram Singh Majithia on Wednesday for levelling charges of involvement in drugs trade against the former minister.
"We have announced to break our alliance with the AAP. We cannot be associated with a party whose main leader meekly surrendered by tendering apology to former minister Bikram Singh Majithia," LIP leader and MLA Simarjeet Singh Bains said in Chandigarh today.
Mr Bains also called Arvind Kejriwal a "traitor", alleging that he "betrayed" the people of Punjab by tendering an apology.
"He is a fraudster. He accepted funds from Punjabis and also promised to punish Majithia. And now he tendered an apology which is a biggest fraud with Punjabis. Therefore we ended alliance with AAP," he said.
However, he said he will continue to support "at personal level" 14-15 AAP MLAs out of 20 who are working in the interest of Punjab.
In his apology, Mr Kejriwal said he had now learnt that his allegations were unfounded.
Earlier in the day, Sangrur MP Bhagwant Mann resigned as the AAP's Punjab chief protesting the apology.
The Delhi chief minister's apology drew flak from his party's other leaders and MLAs in Punjab, who said they were "stunned" by the move and "disappointed" as Kejriwal had not kept them in the "loop".