A town is being stripped of scores of public sector jobs because its residents are "too white and British".
The Prison Service is relocating the posts to a nearby city where there are more ethnic minorities.
The incredible decision, which could lead to an investigation by the Commission for Racial Equality, was disclosed yesterday in a leaked official letter.
It is the first known case of its kind, but MPs warned similar moves could secretly be taking place across the country as civil servants are under enormous pressure from ministers to boost the number of ethnic minorities working in the public sector.
The 80 office jobs are being transferred from the depressed former steel town of Corby, in Northamptonshire, to Leicester.
The Tory General Election candidate for the town, which suffers from deprivation and is in desperate need of jobs, wrote to the Prison Service to demand an explanation.
In an astonishing reply, director of finance Ann Beasley - one of Home Secretary John Reid's top civil servants - said the town had too many white British residents.
As a result, it does not satisfy the drive to recruit more ethnic minorities.
Under the heading "key influencing factors", the letter states: "Our ability to attract a more diverse workforce - 93.7 per cent of the population of Corby are white British, compared to 59.6 per cent in Leicester>"
Mrs Beasley also implies Corby's residents are also too stupid to keep the jobs, which are mostly clerical posts buying equipment for the prison service.
She states that 17 per cent of people living in Leicester are qualified to degree level, compared with only nine per cent in Corby.
Furious opposition politicians were stunned by the reply and accused Labour of effectively being racist against whites.