Reeta Chakrabarti reports: "A sharp rebuke for the police"

Sir William MacPherson's remarks as the inquiry re-opens are being seen as an indication of a critical attitude to the police as he prepares his report, due in December.

The former High Court judge said the police should accept the black community's complaints.

Stephen Lawrence's killer remains at large

"This inquiry, which has been an extraordinary experience for all of us, has thrown up an obvious crisis of confidence between the black community and the Metropolitan Police.

"Some say it has damaged race relations. I hope very much that will not turn out to be the epitaph of this inquiry."

He hoped instead the investigation into the unsolved racist murder would mark a watershed in police relations.

BBC Community Affairs Correspondent Hugh Muir reporting from the inquiry

A-level student Stephen Lawrence was stabbed to death by a gang of white youths at a bus stop in Eltham, south east London, in April 1993.

No one has ever been convicted of the murder, and the inquiry has already heard evidence of alleged bungling and racism by officers.

Home Office expert Paul Pugh gave evidence as the investigation re-opened on Thursday after a two-month break.

Paul Condon: New training announced as inquiry re-opened

As Met chief Sir Paul Condon announced new training measures, Mr Pugh admitted that police race awareness training had so far been a waste of money.

He also conceded that the disproportionate number of arrests and searches of black youths was down to their colour.

According to Home Office statistics, 108 black people in every 1,000 have been arrested by the police.

But only 14 per 1,000 white people have suffered the same experience.

Home Office figures also show only 2% of serving police officers are from ethnic minorities, even though they make up nearly 6% of the population.

In London the disparity is even wider, with 3.3% of officers, compared with an overall population of 19.2%.

Sir William: Inquiry chairman critical of police

Mr Pugh said recruitment policy had to be reviewed to combat what he called the "canteen culture" in many stations.

Sir William said the policy of "stop and search" had to be changed if relations were to be improved.

And he told Mr Pugh it was not just the police who could learn from the inquiry.

"It might be good for the Home Office and everybody else involved, to take on the perceptions of the black community and assume they are right rather than make excuses and assume they are wrong."

Sir William's comments are the strongest hint yet that his report is likely to be highly critical of the force.