Brian Dodgeon, 60, was grilled by cops after the tragedy at a party hosted by his 14-year-old daughter while he was away for the night. Kids discovered a stash of drugs including ecstasy, LSD and ketamine hidden in a bedroom.
Victim Issy Reilly-Jones collapsed after taking two ecstasy pills and died in Notting Hill, West London, before she could be taken to hospital.
Three other kids, including Mr Dodgeon's daughter, were rushed to A&E with convulsions.
Others fled as police arrived.
Teenager Issy died after ecstasy tablets were handed round "like sweets" at the sleepover.
Youngsters had discovered a stash of drugs hidden in a bedroom during the gathering hosted by Beatrice Hadjipateras, 14.
Beatrice had invited a dozen friends to her home in upmarket Notting Hill after her parents went away overnight.
The pals chatted, played music and watched TV before finding the drugs in the early hours of Saturday.
Sources said ecstasy pills were handed out and popular Issy collapsed after taking two.
Terrified friends dialled 999, but paramedics found her heart had stopped by the time they arrived.
Issy was rushed to hospital but attempts to resuscitate her failed.
Beatrice and two 14-year-old boys, named as Jamal Clarke and Harry Barton, were also taken to hospital suffering convulsions.
They were in a stable condition last night.
Beatrice's father Brian Dodgeon, 60 - an education researcher and child development expert - was arrested on suspicion of drug possession and child abandonment.
A source said: "The girls found a bag containing ecstasy and handed pills out as if they were sweets. Some had been drinking Bacardi and vodka, and mixed them with that.
"Issy was the first to collapse, and her friends called for an ambulance. The police also turned up and some of the youngsters ran."
Cops confirmed they had seized quantities of suspected ketamine and LSD as well as ecstasy.
A source added: "The drugs had not been left lying around. They were taken from a hiding place."
A neighbour named Daniella revealed Beatrice's mum Angela had warned her about the party, a few streets from PM David Cameron's former home.
Daniella, 25, said: "There was so much noise I went out. I got a phone call later and my friend said there were police outside."
A mother of one of the partygoers said: "It was not a drugs party - the kids were drinking when Bea said her dad had got some weed or something so they were looking for it. They found some bags of pills in a wardrobe and four of them took some. Issy had had a bad reaction and had a massive fit."
Issy, from Acton, had hinted at drug use on a social networking site.
Describing herself as "a down-to-earth girl", she wrote: "I'm a teenager and changing every day of my life - it's drugs, sex, family and every minute I make mistakes."
Grieving friends are organising a memorial gathering this afternoon on a green in Chiswick.
One wrote on Facebook: "It's to show respect, so don't ruin it by bringing drugs or alcohol."
Mr Dodgeon was released on bail until June. Police urged kids who were at the party to call 0300 123 1212 or Crimestoppers on 0800 555 111.
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