Carphone Warehouse suspended its sponsorship of Celebrity Big Brother today as a result of the race row. The company ordered Channel 4 to remove its name and branding from the programme.
The move came after last night's episode saw an escalation of alleged racist bullying directed at Bollywood star Shilpa Shetty.
Carphone Warehouse chief executive Charles Dunstone said in a statement: "Our concern has rapidly mounted about the broadcast behaviour of individuals within the Big Brother house.
"We are totally against all forms of racism and bullying and indeed this behaviour is entirely at odds with the brand values of The Carphone Warehouse.
"As a result, we feel that as long as this continues, we are unable to associate our brand with the programme. We had already made it clear to Channel 4 that were this to continue, we would have to consider our position.
"Nothing we saw last night gave us any comfort. Accordingly, we have instructed Channel 4 to remove our sponsorship name and branding with immediate effect."
The Perfume Shop said today it had decided to withdraw sales of Jade's perfume from its shelves following the Big Brother controversy.
The Channel 4 chief executive Andy Duncan today defended the decision to keep Celebrity Big Brother on air - saying the issues raised were " unquestionably a good thing".
Making his first public comment about the controversy, Mr Duncan said he would not be pulling the plug on the format.
He told a media conference in Oxford: "The level of complaint and comment shows the programme has touched a real nerve.
"The debate has been heated, the viewing has at times been uncomfortable but, in my view, it is unquestionably a good thing that the programme has raised these issues and provoked such a debate. These attitudes, however distasteful, do persist - we need to confront that truth."
He said Jade had been spoken to about her comments in footage which would be seen in tonight's show.
Commons Leader Jack Straw today encouraged media watchdogs to launch an immediate investigation into alleged racism on Celebrity Big Brother.
Mr Straw said Ofcom had the power to act now and warned it would be " risible" to wait until the show finished.
And he called for a "tough and unequivocal" response to racism wherever it occurred.
During exchanges in the House of Commons, Mr Straw told MPs: "I don't think any of us should have a casual approach to racism.
"We have managed to change the climate of opinion in this country by being very tough and unequivocal on the issue of racism in public and in private.
"It is very important that we maintain that approach."
He continued: "Ofcom, I understand, do have powers to open investigations now whilst the programme is being broadcast instead of having - as I think would be risible - to wait until after the programme has finished."
He was replying to Labour former minister Keith Vaz who warned the row was damaging Britain's reputation abroad.
Leicester East MP Mr Vaz - who has tabled a parliamentary motion on the issue - added: "Later this afternoon the chief executive of Channel 4, Andy Duncan, is making a plea in Oxford for more public subsidies.
"Could we have an urgent debate on the remit and financing of Channel 4 and the responsibility of broadcasters not to publish racial prejudices?"
Mr Straw said he would consider a debate.
Labour ex-minister Chris Mullin said later: "The current vulgarity arising from the Big Brother programme is a classic example of the case against any kind of public subsidy for Channel 4."
The furore over the treatment of Bollywood star Shilpa Shetty in the Big Brother house has focused the world's attention on Britain's treatment of foreigners.
But is the nation institutionally racist or has the media whipped up a storm that does not exist?
The knives are certainly out for housemates Jade Goody, her boyfriend Jack Tweed, Danielle Lloyd and Jo O'Meara who are accused of racially abusing Miss Shetty - an actress who has starred in more than 50 Bollywood films.
Complaints began flooding in to Channel 4 and industry watchdog Ofcom after a row erupted in the house over, of all things, an under-cooked chicken.
Insults aimed at 31-year-old Shetty have included: "Is it India where they eat with their hands?", "I don't want her hands in it. You don't know where those hands have been," and "f**k off home, she can't even speak English properly."
It is these comments that convinced Carphone Warehouse bosses to suspend their £3 million sponsorship of the show and the Perfume Shop to take Goody's range off the shelves.
Milena Buyum, a senior co-ordinator of charity the National Assembly Against Racism, believes the show is proof both overt and institutional racism still exist in British society.
"I think the housemates have clearly shown they are racist towards Shilpa Shetty," she said. "And by not disciplining the contestants the programme makers have shown institutional racism.
"Channel 4 say they have not heard any overt racism. If that is true they either don't understand the issue or are enjoying the higher ratings.
"If the contestants talk about evictions they get warnings. But it seems they can get away with making fun of someone's name and accent.
"What is happening in the house reflects, sadly what we at the assembly hear about everyday. I think it will shock a lot of the public but the myth that racism has gone away is just that - a myth."
Although it is more than a week since the rows began it is only in the last 48 hours Shetty has considered her treatment could be due to her race.
Talking with fellow housemate Cleo Rocos, Shetty - who speaks seven languages - complained she believed she was the victim of racist bullying.
Rocos replied: "I don't think there is anything racist in it." But Shetty disagreed: "It is, I am telling you."
Almost 30,000 people have lodged their complaints with Ofcom but representatives of the former Miss Great Britain Lloyd and Goody - who first found fame in the normal Big Brother house in 2002 - have categorically denied the pair are racist.
Goody's spokeswoman said: "I have not heard Jade say anything that could be interpreted as racist."
There seems little argument that the housemates are bullying Shetty. But not everyone thinks the taunts have been racist.
Respect MP and former Celebrity Big Brother contestant George Galloway said the insults are down to ignorance and jealously rather than overt racism.
He told radio station talkSPORT: "I would not myself say that it is primarily a racial dispute. I think it's more of a class thing than a race thing.
"I am appalled but not surprised at some of the ignorance and some of the boorishness from some of the participants.
"I think they hate this woman because she is beautiful, because she's classy, because she's haughty, because she speaks English better than they do."
And he claimed the public, spurred on by the media, had overreacted.
"I think people have reacted in too knee-jerk a way and I think a lot of these complaints are therefore misplaced," he added.
But London mayor Ken Livingstone disagrees. He told London radio station LBC: "It is clearly racist. Jade Goody and the others aren't fully paid up members of the BNP they've just got that dull ignorant racism that permeates a lot of not just Britain but many societies in the world. It's just shocking to see it."
Hertfordshire Police have launched an investigation into allegations of racism in the Celebrity Big Brother house, the force confirmed today.
A spokesman said: "A police investigation is continuing into allegations of racist behaviour in the Big Brother house in order to establish whether any criminal offences have been committed."
Initially the police were passing complaints about the programme, which is filmed in Elstree, Herts, to broadcasting watchdog Ofcom.Reuse content