Long-serving board member Keith Addy, 72, who along with former chairman Dave Allen and fellow director Geoff Hulley owns a controlling 30 per cent stake in the Owls, admitted that he made the derogatory remark in November and said the matter had since been investigated by the club.

Mr Addy said in a statement: "I can confirm that with great sadness I have decided to stand down as a non-executive director of Sheffield Wednesday FC with immediate effect.

"It is my belief that not doing so would have had a detrimental effect upon a club which I love and which I will continue to support in whatever way I can.

"My resignation follows a remark I made in November last year to a member of staff at the Sheffield Chamber of Commerce and Industry.

"This remark, directed not at the employee, but at a public agency, used a term which I now realise was racially offensive and wholly inappropriate; however, it was not intended as a racial slur but was stated in the heat of the moment at a time of stress and out of frustration.

"It was however, a vestige of language which is no longer used in a multicultural society and this has been a harsh lesson to me that many terms society may once have used are no longer, and should no longer be, a part of our language."

"I would like to make a full and frank apology to the employee who the comment was made to and anyone who may have felt let down by the behaviour I unwittingly displayed."

Sheffield Wednesday yesterday said they had completed an investigation sparked by a complaint made by the chamber of commerce's chief executive, Nigel Tomlinson. He had described Mr Addy's remark as "racially derogatory".

A club statement released last night said: "Sheffield Wednesday Football Club would like to place on record its thanks to Keith Addy for his 32 years of tireless contribution and dedication as a director of the club."

Mr Addy, whose family runs Barnsley-based building firm Wortley Construction, lives in Cawthorne, near Barnsley.

His resignation comes six weeks after controversial figure Dave Allen stepped down as club chairman after a rift with fans and an alleged breach of confidentiality which he described as "totally unacceptable".