Sammy Wilson has vehemently denied agreeing with the comment "get the ethnics out" as he campaigned for the UK to leave the European Union.
The former Executive Minister insisted he was responding to a question he put to a member of the public while out and about and could not remember if he heard him make the statement.
The DUP MP also accused the BBC of giving the impression he had been "caught out" during a walkabout at a market in Carrickfergus three weeks ago.
He stressed that anyone who was aware of his personal life would know he was not a racist.
"I knew that I was being recorded, filmed and followed by the reporter," Mr Wilson said.
"I am experienced enough to know that any endorsement of such a view would be major news, so even if I had agreed with the sentiments, which of course I don't, I was hardly likely to put that on record.
In his brief conversation with the member of the public, Mr Wilson told the man: "They are doing a programme on the BBC about should we stay in the European Union or get out of it, so I am going around talking to people and then they are going to do an interview with me."
The man then said: "I'd say get out of it... between you and me get the ethnics out too."
Mr Wilson then replied: "You are absolutely right, you know."
However, the former finance and environment minister said he could not remember if he had heard the remark but emphasised his own comment "you are absolutely right" was in response to the issue he had raised.
Mr Wilson said he had been a member of the Chinese chamber of commerce, had previously had people from China and Iran stay at his home for three or four weeks at a time, and that friends in the Pakistani community had hosted him as a guest at the former Odyssey Arena for a performance of Mrs Brown's Boys.
Speaking on BBC Radio Ulster's Talkback programme, he added: "I asked the man did he agree should we get in or out. He said we should get out, and then added the comment 'Get the ethnics out'. I was responding to the answer he gave me to the question I put. If there was any ambiguity about it, later on (the Spotlight team) sat down and had a one-to-one where I made my views quite clear, and at no part did I even hint or suggest that we should be putting all ethnics out."
Asked if he did not hear the comment, Mr Wilson replied: "I am not going to say that I did or I didn't. I can't remember.
"I think the BBC have an agenda, trying to promote the 'stay' campaign and portray those who are opposed as racist.
"The... impression has been given that this was something I said in private - that I was caught out."
Talkback presenter William Crawley dismissed the allegation against the BBC as "nonsense".
Nonetheless, a storm over his initial response to the comment - recorded for the BBC NI Spotlight programme which was broadcast last night - continued after the DUP distanced itself from the remark.
A party statement said: "The DUP values everyone who comes to Northern Ireland and makes a contribution to our society. Ethnic minorities are vital to our biggest and best companies never mind our health service.
"'Get the ethnics out' is a disgraceful phrase. We disassociate the party from the comment made by a member of the public."
Ulster Unionist leader Mike Nesbitt said the recorded encounter was "stomach-churning" because ethnic minorities "make vital contributions to our society".
He added: "Sometimes, people ask me what's the difference between the Ulster Unionists and the DUP, and I would talk about the DUP being isolationist and little Northern Irelanders."
SDLP Patsy McGlone said: "This is not the first time that a senior DUP figure has said something that has caused great offence to minority groups within our society.
"As one of the DUP's loudest Eurosceptic voices, it must also be asked if it is views like these which are really driving the DUP's push for an exit from the EU."
Alliance MLA Stewart Dickson added: "There can never be any excuse for such views. The vast majority of people in Northern Ireland want a more welcoming, inclusive and progressive society. Racist language such as this only fosters hate and division."
He also urged the UUP, which has in the past forged electoral pacts with the DUP, to "look at how hollow their condemnations now ring".
"We all have a responsibility to make Northern Ireland an open place, where people from all backgrounds feel safe and valued," he added. "We must unite to show we are welcoming. Such racist views and language must become a thing of the past."
The DUP also commented: "While there needs to be a discussion about how we control our borders, this should be conducted in a factual and respectful manner as part of the EU referendum debates."