The demonstration attracted around 100 people, some of whom shouted anti-Semitic slogans such as "Dirty Jews, send the Jews to Auschwitz" as the flag burned, several media reports said.
The Hungarian foreign ministry condemned Lenhardt's "unacceptable" actions, saying they were an incitement to racial hatred. The Israeli embassy called on the government of Prime Minister Viktor Orban to "take all necessary measures" to put an end to such "hostile, offensive" actions.
Lenhardt until recently was a member of the far-right Jobbik party but left because he said they were too moderate.
Another Jobbik MP, Marton Gyongyosi, sparked outrage in late November by calling in parliament for a "survey" in Hungary to identify "how many are of Jewish origin and present a certain national security risk to Hungary."