Conservative MP Anne Marie Morris has been recorded saying leaving the EU without a deal is a “real n*****r in the woodpile.”
She made the comment during a meeting about how a financial services deal could be done between the UK and Brussels after 2019, The Huffington Post said.
The MP spoke about how Brexit would only affect 7% of UK financial services, before adding: "Now I’m sure there will be many people who’ll challenge that, but my response and my request is 'look at the detail, it isn’t all doom and gloom.'
“Now we get to the real n****r in the woodpile which is, in two years, what happens if there is no deal?”
Others at the meeting, held at the East India Club in St James Square, included other Tory MPs such as Bill Cash and John Redwood but no one reacted to the offensive term.
Morris has since apologised, but that has done nothing to appease her detractors.
Outgoing Lib Dem leader Tim Farron has said: "This disgusting comment belongs in the era of the Jim Crow laws and has no place in our parliament.
“The Conservative Party should withdraw the whip from Anne Marie Morris and they should do it today.
“Every hour they leave her in place is a stain on them and the so called ‘compassionate conservatism’ they supposedly espouse."
Green Party co-leader Caroline Lucas also tweeted: "Appalling. Should have the whip removed immediately. No place in our politics for racism, full stop."