David Cameron's policy chief Oliver Letwin has apologised "unreservedly" for any offence he caused for "racist" remarks he made in the wake of the 1985 Broadwater Farm riots.
Files released by the National Archives in Kew, south-west London, show that Mr Letwin - then an adviser in Margaret Thatcher's No 10 policy unit - blamed "bad moral attitudes" for a series of major disturbances which broke out across a series of mainly black inner city areas.
In an outspoken memorandum to the prime minister, he poured scorn on claims that the unrest was the product of urban deprivation, saying white communities had endured such conditions for decades without rioting.
He also dismissed proposals by ministers to foster a new class of black entrepreneurs, saying they would simply set up in the "disco and drug trade".
In a statement, Mr Letwin - now a minister in the Cabinet Office - said: "I want to make clear that some parts of a private memo I wrote nearly 30 years ago were both badly worded and wrong.
"I apologise unreservedly for any offence these comments have caused and wish to make clear that none was intended."
His remarks were strongly condemned by Labour deputy leader Tom Watson who said he must explain his comments.
"Oliver Letwin's comments are evidence of an ignorant and deeply racist view of the world. He obviously cannot justify his opinions but he must explain himself and apologise without delay," he said.
"A great many people will be asking whether, as a government minister, he still holds such offensive and divisive views."
Labour MP David Lammy, who grew up alongside the Broadwater Farm estate in Tottenham, north London, said the comments were "breathtaking".
"It had nothing to do with moral bankruptcy and everything to do with social decay and the appalling relations between black youths and the police," he said.
"Letwin's statement is an indication of how the powerful can be so utterly, utterly out of touch with what's going on."
The riots which erupted in autumn 1985 were among the worst disturbances to hit mainland Britain in recent times.
They included serious unrest in the Handsworth area of Birmingham and Brixton, south London, as well as the Broadwater Farm riot where Pc Keith Blakelock was stabbed to death.
The troubles were widely blamed on a combustible combination of high unemployment, slum housing, poor education and an atmosphere of bitter distrust between many young black people and the police.
In one document among the papers released by the National Archives, home secretary Douglas Hurd pointed to the underlying social and economic problems in the areas which had a "specific ethnic (notably black) dimension".
But in his memo, written with fellow future Tory MP Hartley Booth, Mr Letwin urged Mrs Thatcher to reject the prevailing orthodoxy, insisting the troubles came down to "individual characters and attitudes".
"The root of social malaise is not poor housing, or youth 'alienation', or the lack of a middle class," they wrote.
"Lower-class, unemployed white people lived for years in appalling slums without a breakdown of public order on anything like the present scale; in the midst of the depression, people in Brixton went out, leaving their grocery money in a bag at the front door, and expecting to see groceries there when they got back.
"Riots, criminality and social disintegration are caused solely by individual characters and attitudes. So long as bad moral attitudes remain, all efforts to improve the inner cities will founder."
Plans by environment secretary Kenneth Baker to refurbish crumbling tower blocks or by employment secretary Lord Young to encourage new black middle-class entrepreneurs as a "force for stability" were not the answer, they argued.
"David Young's new entrepreneurs will set up in the disco and drug trade; Kenneth Baker's refurbished council blocks will decay through vandalism combined with neglect; and people will graduate from temporary training or employment programmes into unemployment or crime," they said.
Government measures would be effective, they said, onlyif they succeeded in changing attitudes to "personal responsibility, basic honesty, the law and the police" from an early age.
Such schemes could include placing "young delinquents" in "good" foster homes and the creation of a new "youth corps" to promote "moral values".
In a follow-up paper, Mr Booth attacked plans for a £10 million communities programme, suggesting it would do little more than "subsidise Rastafarian arts and crafts workshops".
The policy unit's proposals were strongly criticised at the time by cabinet secretary Sir Robert Armstrong, who warned Mrs Thatcher that the proposed attempts at "social engineering" raised some "very large and problematic questions".