Channel 4 has been ordered to make a series of unprecedented on-air apologies after being found guilty "of "serious editorial misjudgment" over its handling of the Shilpa Shetty racism row on the reality TV show Celebrity Big Brother.

Ofcom, the media watchdog, received close to 45,000 complaints after the 2007 series showed Shetty, a Bollywood actress, being picked on by housemates Jade Goody, Jo O’Meara and Lloyd.

Ofcom ruled today that three incidents broadcast by Channel 4 did not comply with the broadcasting code. They were:

• Goody referring to Shetty as "Shilpa Poppadom";
• Lloyd saying that Shetty should "f*** off home";
• the argument over Shetty cooking a chicken, which ended with Lloyd and O’Meara making derogatory comments about Indian eating habits.

While Channel 4 argued that "the incidents broadcast were responsibly handled" and said "important freedom of expression issues were at stake", Ofcom disagreed.

In its findings, the watchdog ruled: "It is Ofcom’s view that when these three incidents were broadcast, Channel 4 failed sufficiently to address the potential for offence or left this behaviour unchallenged. This resulted in offence being caused to a very large number of viewers."

In unseen footage from the show, Goody, O’Meara, Lloyd and Goody’s boyfriend, Jack Tweed, made up a limerick about Shetty in which they joked about using a word which rhymed with "tacky".

Big Brother producers asked O’Meara and Tweed into the Diary Room and told them: "It is clear that this was a reference to the racial insult ‘Paki’." Both agreed. The explosive scenes were never broadcast and Ofcom accepted that Channel 4 bosses were unaware at the time of what had been said.

The Labour MP Keith Vaz, who led protests in Parliament over the issue and introduced Shetty to Tony Blair on a tour of Westminster, called for Channel 4 chief executive Andy Duncan to resign over the affair.

He said: "I welcome the adjudication by Ofcom. This is a vindication of the huge number of complaints that were made by viewers about the continual broadcasting by Channel 4 of racist comments.

"Channel 4 has behaved in an arrogant way which has shown contempt for the code of broadcasting. It is only right that they should be punished by having to broadcast, for the first time, an on-air apology.

"Andy Duncan should now apologise to Shilpa Shetty and realise that the contempt that was shown by them during this whole episode, in my view and that of many of the viewers who complained, now merits his resignation."

But Mr Duncan said that while Channel 4 accepted the sanction as proportionate, it did not believe that any heads should roll - including his own. “We don’t believe this is a resignation issue," he said.

Channel 4 will have to broadcast a statement of Ofcom's findings three times during the new series of Big Brother, due to start next month.

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