Big Brother contestant Emily Parr was removed from the show early this morning after calling fellow housemate Charley Uchea a racially offensive name.
Parr was told to leave the Big Brother house at around 3.30am today.
The incident happened after she was dancing with Uchea and Nicky Maxwell in the living room at approximately 8.30pm last night.
The 19-year-old student was heard to say "Are you pushing it out, you nigger?" to Uchea.
In the early hours of this morning, Parr was called to the diary room and producers told her to leave the house immediately.
Uchea and Maxwell were shocked at the language, though Parr insisted it had been a joke.
Angela Jain, who heads the Big Brother commissioning team at Channel 4, said: "In the wake of Celebrity Big Brother, we must consider the potential offence to viewers regardless of Emily's intentions and her housemates' response.
"The word 'nigger' is clearly racially offensive and there was no justification for its use.
"We have removed Emily from the house to once again make it clear to all housemates and the viewers at home that such behaviour won't be tolerated."
Parr was one of the two housemates nominated for eviction on Friday.
The incident was not screened as part of the "as live" streaming on E4 but it will be shown tonight on Channel 4 in the Big Brother highlights show at 10pm.
In the wake of the race row in Celebrity Big Brother, show producer Brighter Pictures and Channel 4 moved quickly to act on Parr's comments last night.
The comments were immediately reported to senior production staff at Brighter Pictures, the Endemol UK subsidiary that produces the show.
Endemol consulted with senior executives at Channel 4 and the decision was taken to remove Parr from the house on the grounds that she "had broken the rules governing contestant behaviour".
Rules given to all contestants state:
"Big Brother will intervene and take appropriate action if housemates behave in a way that Big Brother considers is unacceptable.
"Unacceptable behaviour includes: behaving in a way that could cause serious offence to either their fellow housemates or members of the viewing public including serious offence based on the grounds of race.
"Housemates who act in a way that is seriously unacceptable will be evicted."
At the start of Big Brother 8, Channel 4 and Brighter Pictures put in place new measures to ensure any potentially offensive material was reported.
This followed the landmark ruling by regulator Ofcom last month that forced Channel 4 to make three on-screen apologies over failings in procedure during Celebrity Big Brother in January.
An Endemol spokesman said today: "This vindicates the procedures we have got in place and we have acted accordingly."
Channel 4 is discussing whether there will be an eviction show tomorrow night and whether to frame tonight's show with a discussion about Parr's comments.
Virgin Media, which took over sponsorship of the reality show after Carphone Warehouse pulled out following the Shilpa Shetty racism row in January, is standing by its sponsorship deal.
"We are delighted that Channel 4 took such swift action, it is an indication that they won't accept racism in the Big Brother house," said James Kydd, the managing director of marketing at Virgin Media.
"This is a good example of Channel 4 putting its new processes into action in a decisive way. We are continuing with our sponsorship and will work closely with Channel 4 going forward."
Virgin Media launched its sponsorship idents around this year's Big Brother last week.
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