The number of racially motivated crimes recorded by police in England and Wales went up by 12% to 59,257 in 2004/2005, according to Home Office figures.
Reports of race incidents rose across most police forces.
Racial harassment made up the majority of incidents but the figures also include assaults and vandalism.
The Home Office said the widely-recognised British Crime Survey had shown such incidents were falling.
Separate Home Office figures revealed a 14% rise - to 838,726 - in the number of stop and searches by police.
Black people were six times more likely to be stopped and searched than white people. Asian people were twice as likely to be stopped and searched.
Home Office Minister Fiona Mactaggart said there was much still to do to combat racially aggravated crime.
"That might be an indication that the progress we have made in investigating and prosecuting hate crime has given people greater confidence to report incidents and been effective in preventing them from happening," she said.
The period covered by the statistics pre-dates the July bombings in London last year.
Separate figures for stop and searches under Section 44 of the Terrorism Act 2000 show 32,086 were made, an increase of 9% on the previous year.
Black people were two and a half times more likely to be stopped under the terrorism law than white people. Asian people were twice as likely as white people to be stopped.
The data also revealed that police recorded more than 37,000 racially or religiously aggravated offences in the year - up 6%.
Commenting on the figures in a statement, the Association of Chief Police Officers (Acpo) said the 12% rise in racist incidents included specific work to encourage victims to come forward.
It said the rise in stop and search was down to "varied" reasons including "improved use of intelligence to target activity, increased operational and community focus on street crime, coupled with better briefing and training".
Acpo spokesman and Cheshire chief constable Peter Fahy said: "It is clear that stop and search can be a useful tool in tackling drug dealing and the carrying of weapons, both of which present real concerns to communities.
"The work we have been doing on stop and search shows that the power works best when supported and endorsed by the community to provide the framework of local accountability."
Reported increases in racially or religiously aggravated offences was "largely attributable" to a growth in reporting harassment offences and better awareness of such crimes, Acpo said.
Liberal Democrat home affairs spokesman Nick Clegg said there was still "more that can and should be done" to improve relations with ethnic communities since the Macpherson report (into the racist killing of Stephen Lawrence).
"Whilst intelligence-led searches can play a key role in tackling crime, today's figures will add to the concerns of ethnic groups that they are being unfairly targeted."