Swindon Town have branded a comment made by Paolo di Canio to on-loan striker Jonathan Tehoue as "inappropriate".
Tehoue's lawyer wrote to the club complaining the Town manager had made a comment to the Frenchman in reference to his skin colour, yet Swindon said the report was "without merit".
Di Canio was pledged "complete and unequivocal support", however his employers have since done a U-turn, having written in response to Tehoue's lawyer.
The letter read: "The club wishes to make it clear that it does not condone the reference made by Mr Di Canio during training on 29 March to your client."
Now the Football Association are also investigating the former West Ham United favourite's alleged racial abuse of his player.
The BBC reported documents they obtained as reading: "The club accepts that the use of this phrase was inappropriate and apologises to your client for any upset that this has caused him."
The Robins added an internal inquiry "may result in disciplinary action being taken against Mr Di Canio".
Tehoue in action for former club Leyton Orient
"Mr Di Canio wishes to apologise for the comments, which he did not intend to cause offence by.
"This apology is hereby repeated and the club also regrets that the comment was made by Mr Di Canio."
The club's lawyers insist Di Canio "in no sense intended the reference to be a racial slur". It was also suggested Tehoue was in breach of his contract for failure to train in the desired manner.
Earlier this season Di Canio was involved in a flashpoint with forward Leon Clarke, in which player and staff member had to be separated in front of television cameras after a 3-1 League Cup defeat to Southampton. Clarke was soon offloaded by the club.