The gaffe was revealed as ministers launched a major campaign to fight racism in education, accusing many schools of not doing enough to raise standards among their ethnic-minority pupils.
The latest edition of Feedback, the department's in-house magazine, upset some staff after it included a photograph of a Christmas pantomime featuring the golliwog.
After complaints on the department's Internet site, Hilary Douglas, the DFEE's director of personnel and support services, issued an unreserved apology to staff.
"This clearly should not have appeared in a DFEE publication, and Rani King, the editor, has apologised for the distress and offence it has caused," she said.
"The debate about this on the bulletin board highlights that we may still have some way to go in understanding each other's feelings and perceptions."
Ms Douglas urged staff to take part in race-awareness events organised by the department's equal opportunities team.
News of the apology came as education minister Charles Clarke launched a hard-hitting attack on lack of awareness of race issues in some schools.
"There are too many schools which are not systematically addressing the needs of ethnic-minority pupils," he said. "We have schools which are doing absolutely outstandingly and others that are doing nothing like so well."
Mr Clarke said one area of concern raised by a new study of ethnic-minority under-achievement by the Office for Standards in Education was the continued use of racially-stereotyped teaching materials in some classes.
Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, said: " It is the old danger of throwing stones in glass houses. Anyone who criticises others on this issue should do so with great care, as this little incident shows."
A spokeswoman for James Robertson and Sons, who still use a golliwog picture on their jam jars, said: "Golly was created as a non-violent, loveable character - unlike so many of the modern-day character heroes.
"Our research with consumers, both black and white, shows that the vast majority do not consider Golly to be racist."
Black teachers have promotion 'blocked', page 6