Sun columnist Kelvin MacKenzie has been suspended from the newspaper after a column in which he described the people of Liverpool as "drug dealers" and convicts.
Sun publisher News UK said he had been suspended for expressing "wrong" and "unfunny" views about the city's residents in a column attacking England international Ross Barkley.
The announcement came after the Mayor of Liverpool reported an article by MacKenzie - the newspaper's former editor - to police for containing what he called a "racial slur" against the Everton footballer.
A spokesman for News UK apologised for any offence caused, saying there was "never any slur intended".
Earlier on Friday, the Mayor of Liverpool Joe Anderson tweeted that he had reported MacKenzie to Merseyside Police and the press regulator.
He said he had taken offence at remarks made regarding midfielder Barkley, who was assaulted in a Liverpool nightclub in the early hours of Monday.
In his column, MacKenzie described the 23-year-old as "one of our dimmest footballers".
"There is something about the lack of reflection in his eyes which makes me certain not only are the lights not on, there is definitely nobody at home," he wrote.
"I get a similar feeling when seeing a gorilla at the zoo. The physique is magnificent but it's the eyes that tell the story."
He went on to state that Barkley was "an attractive catch in the Liverpool area", as "the only men with similar pay packets are drug dealers and therefore not at nightclubs, as they are often guests of Her Majesty."
Mr Anderson said the remarks were "racist" both in the sense that Barkley has a Nigerian grandfather, as well as the "prehistoric" stereotype of Liverpool.
MacKenzie has since responded to say he did not know of Barkley's family background, calling it "beyond parody" for critics to describe his article as "racist".
It marks the latest development in the fraught relationship between Liverpool and The Sun.
MacKenzie was at the helm of the tabloid in 1989, when it ran a story four days after the Hillsborough tragedy laying the blame on the victims and claiming fans had "picked pockets" of those killed, under the headline "The Truth".
An inquest jury last year concluded that the 96 who died had been unlawfully killed, and that the behaviour of supporters had played no role in the tragedy.
MacKenzie has since apologised for the coverage, saying it had been based on "deliberate misinformation from the South Yorkshire Police".