The fashion house Christian Dior fired its chief designer, John Galliano, yesterday for what it described as "particularly odious" remarks glorifying Adolf Hitler and the Holocaust.

The French label said that it had started formal procedures to sack Mr Galliano, 50, after studying words and drunken behaviour on a video "which totally contradict the essential values that we always uphold".

The dismissal of the much-admired British designer, after 15 years as the main artistic force at Dior, sent shockwaves through the fashion world. Earlier, the Jewish-American actress Natalie Portman, the winner of an Oscar on Sunday and the commercial face of Miss Dior perfumes, said she never wished to work with Mr Galliano again.

Some French sources suggested that Dior had been unhappy with Mr Galliano's erratic behaviour for some time and that the house – part of the LVMH luxury goods empire – was pleased to have a chance to dismiss him. Other fashion industry officials in Paris said Dior would be devastated to lose Galliano's creative genius and distressed to have run into such a storm in the middle of Paris Fashion Week.

The Gibraltar-born designer was suspended by Dior last Friday after allegedly making anti-Semitic and racist remarks to a couple in a trendy Paris bar. A mobile telephone video was then sold to The Sun newspaper, showing Mr Galliano giving virulent racial abuse to other customers in the same Paris bar in December.

The short video starts in mid-argument. A woman asks: "Don't you want peace between nations... Are you blond, with blue eyes?"

Mr Galliano, wearing a large, felt hat, replies, with deeply slurred words: "No, but I love Hitler, and people like you would be dead today. Your mothers, your forefathers, would be... gassed and... dead."

Investigators are expected to decide before the end of the week whether to bring formal charges against Mr Galliano of stirring racial hatred. A woman approached police in Paris at the weekend and alleged that she had also been racially abused by the designer in the same bar – La Perle in the Marais district – last October.

On Monday, the designer was summoned by police to two face-to-face meetings with his accusers. Sources said the meetings were inconclusive. Mr Galliano denied making any racist remarks and his story was supported by written and verbal evidence from bar staff and other customers.

The video of a third incident on 12 December seems, however, to have persuaded Christian Dior that Mr Galliano's future with the brand was untenable. The film had been sold to The Sun by the video-sharing internet site, Citizenside.

Portman said yesterday that she was "shocked and disgusted" by the film. She said: "As an individual who is proud to be Jewish, I will not be associated with Mr Galliano in any way."

The chief executive of Dior, Sidney Toledano, issued a terse statement yesterday. He said Mr Galliano had been "laid off" and that procedures had been started to dismiss him. He said he "condemned with the greatest firmness the comments made by John Galliano which totally contradict the essential values always represented [by Dior]".

Many questions remain, however. Mr Galliano, although an occasionally outrageous figure, is mostly known as a gentle and courteous man. None of the people involved in any of the alleged incidents was Jewish.

A show on Sunday of Mr Galliano's own label is said to be going ahead.