Three children were removed from the care of a married couple because social workers were concerned about their "cultural and ethnic needs".
The South Yorkshire foster parents claimed they had been told Ukip - which campaigns for British withdrawal from the European Union and tougher controls on immigration - was "racist".
The actions of Labour-controlled Rotherham Metropolitan Borough Council were met with fury from Ukip leader Nigel Farage, who called for resignations over what he said was an "appalling" decision.
Labour urged the council to mount an urgent investigation. There is a by-election in Rotherham next Thursday to replace Labour MP Denis MacShane, who resigned over an expenses row,
Joyce Thacker, strategic director of children and young people's services at Rotherham Metropolitan Borough Council, said the three ethnic minority children had been placed with the couple as an emergency and it was never going to be a long-term arrangement.
"Also the fact of the matter is I have to look at the children's cultural and ethnic needs. The children have been in care proceedings before and the judge had previously criticised us for not looking after the children's cultural and ethnic needs, and we have had to really take that into consideration with the placement that they were in," she said.
The couple, who have not been named, are in their late 50s and have looked after about a dozen children in the past seven years. The latest placement of three children began in September but was ended after eight weeks over their membership of Ukip.
The wife said she asked the social workers what Ukip had to do with the decision. "Then one of them said, 'Well, Ukip have got racist policies'. The implication was that we were racist. (The social worker) said Ukip does not like European people and wants them all out of the country to be returned to their own countries.
"I'm sat there and I'm thinking, 'What the hell is going off here?' because I wouldn't have joined Ukip if they thought that.
"I've got mixed race in my family. I said, 'I am absolutely offended that you could come in my house and accuse me of being a member of a racist party'."
The wife said she told the social worker and agency official: "These kids have been loved. These kids have been treated no differently to our own children. We wouldn't have taken these children on if we had been racist."
Mr Farage accused the Labour-controlled council of bigotry. Asked how he felt on hearing of the council's actions, he said: "Very upset and very angry, particularly for the couple involved, who have been fostering for many years and are very decent people, and the awful shock to them of having these children removed, not to mention the upset to the children themselves.
"Politically, I'm afraid not surprised at all. This is typical of the kind of bigotry we get from the Labour Party and from Labour controlled councils.
"It was the Labour government that opened the doors to uncontrolled mass immigration into this country on a scale that we have never seen in the history of the island. And then anybody who tries to discuss or debate the issue is written off as being racist."
Mr Farage also appealed to voters in Rotherham to make their views known at the ballot box.
"The first and most important thing is that this couple get back their status as foster parents and these children are returned as quickly as possible. Second, heads need to roll in the council at Rotherham. And thirdly, the electors can make their own mind up on this in the by-election in Rotherham," he said.
A Labour Party spokesman said: "Membership of Ukip should not block parents from adopting children. There needs to be an urgent investigation by Rotherham Borough Council into this decision."