The row erupted when Millbank revealed that its slate of 14 constituency hopefuls for the GLA elections next May contained two Asian members.
The party's embarrassment is set to deepen later this year when mayoral candidate Trevor Phillips is expected to announce that he has given up plans of standing for the assembly, The Independent has learned.
Mr Phillips' withdrawal to concentrate on the mayoral race means that there will be no high-profile black Labour candidate for the GLA and little chance of a black deputy mayor drawn from its ranks.
Several black candidates were excluded from the party's shortlist earlier this year on the grounds that they were "inexperienced" or "unsuitable".
Atma Singh, secretary of the Labour Black Representation Committee, said: "This is totally unrepresentative of the black population of London."
Lee Jasper, spokesman for Operation Black Vote and himself an excluded candidate, said the move risked leaving London with racially divided politics.
Mark Seddon, a leading left-wing member of Labour's ruling National Executive Committee, also attacked the paucity of black representation.
"If you vet people as they have done, then this the situation that results," he said. "We have a wealth of talent out there, but the black and Asian candidates never had a chance in the selection process."