The Prince of Wales has been described as a man of "zero prejudice" by the Asian friend he calls Sooty.
Kolin Dhillon said the nickname used by Charles and other players at the Cirencester polo club where they are members was "a term of affection".
Charles was branded "out of touch" for using the nickname, which refers to Mr Dhillon's skin colour, but the Prince's friend insisted he was not offended by it.
He said: "I have to say that you know you have arrived when you acquire a nickname.
"I enjoy being called Sooty by my friends who I am sure universally use the name as a term of affection with no offence meant or felt.
"The Prince of Wales is a man of zero prejudice and both his sons have always been most respectful."
The race row comes a few days after Prince Harry was widely condemned for calling a former Army colleague "Paki".
Mr Dhillon, a former chairman of the Schools and Universities Polo Association, is originally from the Punjab and emigrated to Britain in 1955.
In the 1990s he hosted school polo matches on his home's private polo field that were attended by Charles' sons William and Harry when they were studying at Eton.
Mr Dhillon's real name is Kuldip Singh Dhillon but he is also known by the Anglicised name Kolin.
Mr Dhillon, who lives near Cirencester, is a long-standing member of his polo club and has been playing the sport for more than three decades.
Over the years he would have become clubmates with Charles, 60, whose Highgrove home in Gloucestershire is near the club and whose sons are also members.
Graham Smith, campaign manager for the organisation Republic, said the development revealed that the royal family were "not a symbol of unity" but "quite divisive".
He said: "It also shows how hugely out of touch they are and that they live in a very isolated world, only mixing with a certain kind of person."
Clarence House defended Charles and his sons, saying: "To imply the princes are racist is ridiculous.
"Through their charity work, all three of them are committed to helping people, both in the UK and abroad, regardless of who they are."
Lady Sara Apsley waded into the latest row today and urged against "royal- bashing".
Lady Apsley, who hosts Cirencester Polo Club on 3,000 acres at Cirencester Park, told the Gloucestershire Echo she too had called Mr Dhillon "Sooty" for years.
She said: "Sooty is a fantastic friend of ours and he couldn't care less about his nickname.
"We all have enormous respect and liking for him. He's comfortable in his own skin and certainly doesn't have a chip on his shoulder.
"I imagine there are millions of people across the world called names with racial intonations but they're not meant maliciously.
"I'm sick and tired of all this. Being PC has got so ridiculous - you can't say anything now. Where is our freedom of speech?"
Lady Apsley, the daughter of Lord Bathurst, who runs a farming business on the 15,000-acre Cirencester Park estate, also leapt to the Prince's defence.
She said: "We should really focus on who released that private home video which started all of this - it's an invasion of privacy.
"Harry is one of the kindest, loveliest, most fun and relaxed young gentlemen I've had the pleasure to know."