A former mayor accused of saying "all Muslims are terrorists" during an equality training session has refused to apologise.
Conservative councillor Marjorie Snowden is also said to have asked "Why should we be interested in black history?" according to an official report.
Mrs Snowden, 85, was due to face a standards committee hearing into the allegations on Wednesday night but phoned an hour before to say she would not be attending.
West Dorset District councillors ordered her to apologise in writing to equality officer Sue Bickle, who lodged the complaint against her.
But a defiant Mrs Snowden, twice mayor of Sherborne, said yesterday: "I am not politically-correct and I am not apologising to anyone.
"I did not say all Muslims are terrorists – although it is a well-known saying. It is something that has been said many times.
"It's also not strictly true that I asked why should we be interested in black history.
"What I actually said is that we waste far too much money on multicultural black history – why are we wasting taxpayers' money on it?"
The controversial comments were made at what Mrs Snowden described as "a session of political correctness" in June last year.
The equalities and diversity training meeting was being run by Ms Bickle whose formal complaint was backed up by district councillor Molly Rennie.
In the report to the standards committee Ms Bickle alleged: "Councillor Snowden made remarks which were clearly hostile to the Muslim community and bordering on religious hatred, identifying all Muslims as terrorists."
She also alleged Mrs Snowden asked: "Why should we be interested in black history?"
Ms Bickle said: "I struggled to complete the session feeling extremely bullied, victimised and vulnerable."
Jane Nicklen, head of community planning and development and Ms Bickle's line manager, claimed Mrs Snowden also made a "derogatory aside" about homosexuals.
Their allegations were examined by WDDC's investigation officer Roger Greene who presented his report to the standards committee.
He concluded: "I feel I have no option but to find that Councillor Snowden did breach the code of conduct."In her official response to the allegations Mrs Snowden said: "I am afraid the truth does hurt on occasion. The session is a waste of council taxpayers' money.
"My comments at all times were personal from me and because I believed them to be true."