It gave Hackney council three weeks to come up with an action plan to reform its approach to handling issues surrounding ethnic minority staff.

If the CRE it is not satisfied with the proposals it will serve a non-discrimination notice on the council.

This is a legally enforceable order to comply with measures proposed by the CRE, and is the toughest action the CRE can take against an organisation.

The CRE says the allegations against Hackney which led to the investigation were:

• a failure to address the discriminatory impact of its employment practices;
• a failure to monitor or investigate complaints of racial discrimination;
• and a failure to take action after proven cases of discrimination.

It says that an independent report into Hackney last year found there had been 99 applications to the Employment Tribunal with complaints of racial discrimination against Hackney.

In a statement, the chairman of the CRE Sir Herman Ouseley said: "The Race Relations Act lays particular responsibilities upon local authorities.

"It is deplorable that, over two decades after the act first went onto the statute book, a key council which was one of the first to provide significant employment opportunities for ethnic minority staff should now be failing its employees and the public so comprehensively."