The BBC Trust has rejected a complaint about the use of the term "pikey" in an episode of Top Gear.
Broadcast last February, the show saw the team racing 1980s hatchback cars against their modern equivalents.
Presenter Jeremy Clarkson mocked Richard Hammond for choosing a Vauxhall Nova, and erected a placard at the start line that read "Pikey's Peak".
Travellers' groups complained the term was racist, but the BBC said that, in this instance, it merely meant "cheap".
The decision came from the Editorial Standards Committee, part of the corporation's governing body, the BBC Trust.
One of the complainants, the Traveller Movement, said it was "horrified" the BBC had given the term a "green light".
'Play on words'
The BBC's committee acknowledged that "pikey" derived from the word "turnpike" and was therefore related to travellers.
However, it added, the term had "evolved into common parlance among a number of people to mean "chavvy" or "cheap".
"Depending on the context, viewers would not necessarily associate it with the Gypsy and traveller communities."
The committee noted that the placard was a deliberate pun on the US race course Pike's Peak, which had been referenced earlier in the show's script.
"On this occasion, the use of the word 'pikey' as a play on words would not have been seen as a careless or purposeless stereotype about travellers and Gypsies, but in keeping with the style of humour exhibited by the presenters towards Richard Hammond's perceived 'cheap' style," it said in its ruling.
In response, the Traveller Movement said the committee's explanation was "breathtaking in its mendacity".
"The claim that [the word] has evolved a new meaning and that most people do not realise it has any reference at all with Gypsies and travellers is absolute rubbish," said a representative.
"It is an absurd decision that flies in the face of the evidence we presented during the course of the 13 month-long complaint process.
"Gypsy and traveller children are now open to even more abuse in the playground. Abuse that has the official sanction of the BBC Trust."
The BBC Trust's verdict came in December, before Clarkson was suspended for an alleged "fracas" with a producer. However, the findings have only just been made public.
As a result of the complaint, the BBC Trust has advised programme-makers to use the word only with "extreme care and sensitivity".