The Muslim Council of Great Britain has welcomed Robert Kilroy-Silk's decision to quit his BBC talk show.
Mr Kilroy-Silk has hosted the BBC show for 17 years
The council said the presenter's remarks, in the Sunday Express, in which he called Arabs "suicide bombers" and "limb-amputators" had been racist.
Mr Kilroy-Silk is standing by his comments and says he has been overwhelmed by the amount of support he's received from the public.
However, in a statement he said it was the right time for him to leave.
Mr Kilroy-Silk had hosted the BBC One morning chat show for 17 years.
The BBC suspended the programme after the presenter's contentious column in the newspaper on 4 January.
The Muslim Council of Britain said it hoped the episode showed anti-Arab racism was not acceptable.
Secretary-General Iqbal Sacranie said Mr Kilroy-Silk had tried to hide behind the "noble principle of freedom of speech".
Mr Sacranie said: "Kilroy-Silk has for a number of years now been making extremely derogatory and xenophobic remarks about Arabs and Muslims."
However, Mr Kilroy-Silk has insisted his article was meant to attack Arab "regimes" rather than smear all Arabs.
He has also blamed his secretary for its publication - she sent in a column which had already been published in April 2003.
In his resignation statement, he said: "I have been overwhelmed by the support from the general public, and I continue to believe that it is my right to express my views, however uncomfortable they may be.
"However, I recognise the difficulties this has caused the BBC, and I believe my decision is the right way to resolve the situation.
"I will continue to lead the Kilroy Television Company Ltd and in addition to our existing commitments to the BBC, we will be bringing new ideas and programmes to the BBC and other broadcasters," he added.
Critics had accused the BBC of gagging Mr Kilroy-Silk by suspending his show.
On Saturday an editorial in the Daily Express accused the BBC of being "utterly out of touch with public opinion".
"Such high handed and potty political correctness is a shabby way to treat a popular hero," said the newspaper.
But Director of BBC Television Jana Bennett insisted the corporation's decision had not been about freedom of speech.
She said: "Presenters of this kind of programme have a responsibility to uphold the BBC's impartiality."
The corporation wanted to continue to work with him in other on-screen roles, and he remained "a substantial force in the media industry".
BBC Media Correspondent Torin Douglas said it appeared the two sides had reached a compromise which would allow Mr Kilroy-Silk's company to continue to make a similar programme albeit with a different presenter.