Jeremy Clarkson has now been cleared by the BBC Trust for the use of the word "pikey" on a previous episode of Top Gear.
The 54-year-old presenter - who was suspended by the BBC last week following allegations he'd punched a producer - put up a sign with the words "Pikey's Peak" written on it on the BBC motoring show last year leading viewers to complain that it was "grossly offensive and racist" to the "gypsy traveller community".
However, the Trust's Editorial Standards Committee (ESC) have now concluded that the word had been used to mean "cheap", rather than as racist abuse, the Daily Mirror newspaper reports.
The episode in question saw Clarkson and co-hosts James May and Richard Hammond compare 80s hatchback cars with their modern equivalent, resulting in Clarkson and May joking about their colleague's lack of style when he selected a Vauxhall Nova.
After the stars completed a circuit of a race course, Clarkson was seen putting the handmade sign up on a wooden hut.
Producers of the show also claimed the use of the sign was a pun on the name of the racecourse Pikes Peak in the United States.
The ESC believe the word has "evolved into common parlance among a number of people to mean 'chavvy' or 'cheap' and, depending on the context, viewers would not necessarily associate it with the gypsy or traveller communities".
They added: "On this occasion, the use of the word 'pikey' as a play on words would not have been seen as a careless or purposeless stereotype about travellers and gypsies, but in keeping with the humour exhibited by the presenters towards Richard Hammond's perceived 'cheap' style."
The Trust did however admit that the word had the "potential" to cause offense and asked "programme makers" to bear that in mind.
A spokesman for the Traveller Movement condemned the decision, saying: "We are horrified by the BBC's green lighting of the use of the word 'pikey' by the 'Top Gear' presenters.
"The claim that it has evolved a new meaning and that most people do not realise it has any reference at all with gypsies and travellers is absolute rubbish.
The Movement now plan to take their complaint to Ofcom in a bid to have the decision overturned.
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