Schools with a majority of white pupils are not tackling racism, says research published in the week of the Macpherson report on the murder of Stephen Lawrence.
Many teachers have little or no idea of what defines an ethnic minority, what racism is or how to teach about it, according to researchers from the Children's Legal Centre, based at the University of Essex.
Openly racist attitudes among pupils are often ignored by staff, says the report based on a study of 15 secondary schools in Bedfordshire, Essex, Norfolk and Suffolk.
Most teachers at the schools admitted their pupils left ill-prepared for life in a multi-cultural society. "In this school we get over the issue of racism by presenting it as just not an issue," said one.
The findings come the day after Sir William Macpherson's report into the racist killing of black teenager Stephen Lawrence was published. It calls for changes to the national curriculum to ensure race awareness is taught to all children from the age of three.
Sir William says: "There is evidence that there are difficulties in getting some schools to acknowledge and tackle racism even where local authorities have sought to persuade them to do so."
The Essex research showed that most teachers were hostile to the idea of mandatory race lessons, believing them inflexible.
Carolyn Hamilton, director of the Children's Legal Centre, said: "Unless it hits them in the face it didn't even cross most teachers' minds that racism was an issue, and where it did, they were so terrified of getting it wrong they swept it under the carpet. I was horrified to come across a teacher using the word 'nigger', thinking it was okay."
Even schools with good policies were confused as to how to put them into practice. "We have this motto - 'everybody matters' - but no one really knows what that means," said one teacher.
In all 98 per cent of the pupils believed schools have a responsibility to address racism. However, few of those interviewed last year had heard of Stephen Lawrence.
The report highlights the confusion which surrounds multi-cultural teaching in schools.
Staff at 75 per cent of the schools had heard pupils using racist language. Some teachers ignored the comments, most referred to it as general bullying. Only two schools logged racist incidents.
The report also condemns bodies such as the Commission for Racial Equality for not doing enough to help teachers. "They produce great posters and little else," said Ms Hamilton.
Last week Sir Herman Ouseley, chair of the CRE, attracted criticism when he told The TES that British education was "institutionally racist", but the Macpherson report appears to support his view.
Doug McAvoy, general secretary of the National Union of Teachers, said it was important to bring schools from all-white areas into the "race debate".
"It's just as important to look at racism in these schools as in city schools," he said.
However, union leaders rejected the notion that teachers were failing to address racism. David Hart of the National Association of Head Teachers said: "I do not believe there is a school in the country which would not take urgent steps to stamp out racism."
Peter Smith of the Association of Teachers and Lecturers, said: "It is too easy to be politically correct without facing teachers' pressures.
"As important as racism is, if teachers had to put every social concern first eight days a week, 25 hours a day wouldn't be enough."