Kerry Smith has resigned as a UKIP prospective parliamentary candidate after apologising for offensive remarks he made in a phone call.
He was selected to fight the South Basildon and East Thurrock seat after ex-Tory MP Neil Hamilton pulled out.
In a recording obtained by the Mail On Sunday, Mr Smith made offensive remarks about gay people, other UKIP members and Chigwell in Essex.
He later issued a "wholehearted and unreserved apology".
UKIP MEP Steven Woolfe rejected suggestions that Mr Smith's exit and other recent controversies involving Mr Hamilton and the party's general secretary Roger Bird showed UKIP was in turmoil, saying it had dealt with problems "really rapidly".
UKIP hopes to make a serious challenge for the South Basildon and East Thurrock seat in the forthcoming general election, in which it is seeking to win a handful of seats and potentially hold the balance of power.
Negative headlinesBut Mr Smith's resignation, four days after he was re-adopted as a candidate, capped a week of negative headlines for the party.
Mr Hamilton pulled out of contention for the seat amid questions raised by the party over his expenses while another candidate, Natasha Bolter, withdrew amid an investigation into allegations she made against Mr Bird, whose job is to vet election candidates.
Following his resignation on Sunday, Mr Smith said in a statement: "I want the best for South Basildon and Thurrock and I want to see the real issues discussed that touch the lives of people.
"Therefore I have chosen to resign so that UKIP can win this seat next May."
Analysis by political editor Nick RobinsonA parliamentary candidate resigns having tried blaming his racist comments on taking painkillers.
This comes days after an alleged sex scandal at UKIP Head Office in which the party's chief executive did - or did not - sleep with another candidate.
Meantime a wealthy donor is said to be threatening to stop funding the party if his friend doesn't get a seat. You may think that UKIP's week of bad headlines is just a diverting soap opera.
You may think it simply shows the growing pains of Britain's fastest growing political force. You may think it has no significance at all. If so, you'd be wrong.
Read Nick's full blog
During the recorded conversation, Mr Smith talks about UKIP's lesbian, gay, bisexual and transgender (LGBT) group. He can be heard jokingly referring to it as BLT UKIP, and adds "what the old poofter groups call themselves".
He jokes about "shooting peasants" from the Essex town of Chigwell and supporting "a peasant's hunt through Chigwell village".
A UKIP spokesman confirmed to the BBC that Mr Smith had apologised to the party's leader Nigel Farage for allegations made against him during the phone call - which Mr Smith has since retracted.
Patrick O'Flynn, UKIP MEP for the East of England, told BBC One's Sunday Politics that the phone call had been made "some time ago while he was on sedatives" and he had not been "speaking and thinking rationally".
Mr Woolfe, the party's immigration spokesman, said that "racist and homophobic language" would not be tolerated.
"When there is someone who has come out and expressed these type of views, which I abhor and dislike intensely, we have acted rapidly and we have got them out," he told Radio 4's Today programme.
'Ordinary people'UKIP's candidates, he claimed, were "ordinary people" who did not have the media training that their political rivals had and sometimes had to be "guided".
But he insisted the way the party was dealing with problems as they arose showed how it had matured.
"What we have seen over the last ten days is that UKIP has grown up rather dramatically," he added.
"What you are seeing is the first time we have had 600 candidates representing us in a general election, the first time Nigel Farage has been in charge of this party during a general election, and what you are seeing is a party taking this extremely seriously and when we do have issues we are dealing with them really rapidly."
After Mr Hamilton withdrew his candidacy for the Basildon seat earlier this week, Channel 4 reported seeing a letter from UKIP's finance committee querying expenses claims made by him.
Mr Hamilton, UKIP's deputy chairman, said his decision to withdraw from the Basildon selection process was nothing to do with expenses, but that it was a UKIP "dirty trick" to stitch him up.
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