The outgoing chairman of the CRE, Sir Herman Ouseley, warned the government that it had passed up a unique opportunity to eradicate racial discrimination.

The Race Relations (Ammendment) Bill, unveiled in the Queen's Speech, would allow racism in much-criticised institutions such as the Metropolitan Police to be tackled more effectively.

The bill would extend the Race Relations Act 1976 to make it unlawful for a public authority to discriminate directly in carrying out any of its functions.

It would also make chief police officers liable for racial discrimination committed by their officers. This would bring the police into line with other employers.

The new bill is a direct result of the recommendations made in the Macpherson report earlier this year into the killing of black teenager Stephen Lawrence.

Sir Herman Ouseley: Critical of the home secretary

Sir Herman told the BBC: "By leaving out indirect discrimination, what the Lawrence Inquiry termed unwitting racism, we fear it will seriously weaken the ability of the CRE to help in tackling the very issues that report highlighted".

The CRE argues that the amended act would only cover direct discrimination rather than tackling indirect discrimination.

The CRE, the TUC and many other bodies have long been campaigning for new measures to combat racism in the workplace.

They want the government to introduce an enforceable duty on public bodies to combat racism and promote racial equality.