Ireland's Taoiseach Leo Varadkar said he initially thought the Twitter account of Lord Kilclooney - who called him a "typical Indian" - was a parody.
The former Ulster Unionist deputy leader denied being racist after making the comment about Mr Varadkar on Monday.
Speaking at Leaders' questions in the Dail, Mr Varadkar said: "In terms of Lord Kilclooney's tweet, I did see it. I actually had thought that
was a parody account, but seemingly it's not.
"It actually is for real, but that's all I'll say about that."
Lord Kilclooney, who is no longer a member of the UUP, said he is "certainly no racist" after his remark was met with condemnation.
Mr Varadkar was born in Ireland. His father is from India and his mother is from Ireland.
Lord Kilclooney, 80, stirred controversy in the tweet as he commented on a news story about DUP criticism of Mr Varadkar regarding his visit to Northern Ireland.
The peer replied to the tweet, writing: "Typical Indian."
Lord Kilclooney later tweeted: "I am certainly no racist and in particular have an admiration for Indians. A member of the British/Indian APPG, only yesterday I had a reply from 10 Downing St asking for a relaxation of visas for Indians. My point was that the PM had upset Unionists more than Irish PMs had!"
Last November, Lord Kilclooney acknowledged a remark he made about Mr Varadkar had caused "upset and misunderstanding" so he was withdrawing it.
He had referred to the Taoiseach as "the Indian".