The former shadow women and equalities secretary was forced to quit her frontbench role last month after a backlash for saying “Britain has a problem with British Pakistani men raping and exploiting white girls”.
The Labour MP used an interview with The Times to highlight differences in attitudes between the capital and Labour’s northern heartlands.
After her resignation Labour leader Jeremy Corbyn - an MP in Islington, north London - said his party would not “blame” or “demonise any particular group”.
Ms Champion told The Times: “If I’m on the floppy left, to be accused of racism is probably the worst thing you can call me. That fear will motivate me to step away from a lot of topics I’d maybe tackle head on if I didn’t have that phobia.”
Her constituency was the scene of a grooming scandal and she said that many Labour members and politicians based in London had “never been challenged by a reality that’s different” from their largely “tolerant, multicultural world”.
“London is not representative of the UK and it’s definitely not representative of the north of England in relation to race,” she said. “Rotherham and many post-industrial towns are still segregated.”
The “multicultural policies that I, through my working career, grew up with, and which Jeremy Corbyn grew up with, need a translation to come outside London”.
Ms Champion stressed: “It’s not that Yorkshire’s racist, it’s that Yorkshire is very blunt and doesn’t sugar-coat anything.
“In Rotherham, people’s frustration is that if they all knew what was going on, why didn’t the people who were meant to protect them do anything about it?”
Ms Champion’s comments about “British Pakistani men” came in a Sun column last month, leading to her resignation and an apology for her “extremely poor choice of words”.