The Conservative Party is calling for an image of David Cameron "blacked up" as a minstrel on a Labour councillor's website to be removed.
The leader of Sandwell Council says the image "overstepped the mark"
Bob Piper, who is a councillor in Sandwell, West Midlands, said the picture was meant to be satirical.
He said the image was a reference to the Conservative Party's online Sort it Out campaign, which features a very tanned promotional character.
Mr Piper's website shows Mr Cameron asking: "Is it because I's black?"
It also portrays him as saying: "Take the Homeboy Test" and "Yo Niggahs".
Grant Shapps, one of the Conservative Party's vice chairmen and MP for Welwyn Hatfield, said the party might take its complaint to the Commission for Race Equality.
He said: "I assume and hope that they (the council) will immediately ask him to take it down and possibly take some disciplinary action themselves.
"If they do not then there's the option of taking it further.... I am sure the Commission for Racial Equality would be interested.
"It just shows a spectacular lack of judgement.
"I know that Bob Piper represents a reasonably diverse and ethnic area - what could he be thinking of to post this up on his blog?"
The Conservatives launched their campaign website last month
Last month the Conservatives launched an anti-debt online campaign asking young people to "ignore the tosser in you" and reduce unnecessary spending.
Visitors to the sort-it.co.uk site are asked to give details of their own overspending and debt.
The party said the idea behind it was to create an online home for "a whole bunch of issues, with practical things that you can do to make a difference".
Mr Piper, who represents the Abbey ward, said he copied the idea for the image on his site from a Sandwell resident's blog called the Ministry of Truth.
He added that he did not feel that people would be offended by the picture although he did "have some reservations about using the N word".
Bill Thomas, the Labour leader of Sandwell Council, told BBC News that the image "overstepped the mark".
"I will be taking measures to see councillor Piper as soon as possible," he added.
"It is his personal site, I have to distance it from Sandwell Council...but certainly I will be looking at this serious allegation."
Some visitors to his site have posted message about the image labelling it "distasteful" and "insulting".
Dr Derrick Campbell, chief executive of Race Equality Sandwell, said: "It's a very offensive image to black people.
"I just do not understand what this image is doing on his website."