The UK Independence Party has banned its representatives from saying the phrase "Bongo Bongo Land", after an MEP used it to describe countries receiving government aid.
Godfrey Bloom was recorded saying payments were being used to buy items like sunglasses and luxury cars.
He also claimed UK aid was spent on fighter planes in Pakistan.
UKIP chairman Steve Crowther said Bongo Bongo Land was an "outdated description of foreign parts".
In footage obtained by the Guardian, recorded last month at a meeting in Wordsley, West Midlands, Mr Bloom said: "How we can possibly be giving £1bn a month, when we're in this sort of debt, to Bongo Bongo Land is completely beyond me.
"To buy Ray-Ban sunglasses, apartments in Paris, Ferraris and all the rest of it that goes with most of the foreign aid.
"F18s for Pakistan. We need a new squadron of F18s. Who's got the squadrons? Pakistan, where we send the money."
Questioned on the BBC News Channel, Mr Bloom, MEP for Yorkshire and Northern Lincolnshire, said it would be "absurd" and "ridiculous" to label his comments racist.
He said Bongo Bongo Land was "a figment of people's imagination. It's like Ruritania or the Third World".
He added: "It's sad how anybody can be offended by a reference to a country that doesn't exist."
Mr Bloom told BBC Radio 4's Today programme: "If I've offended anybody in Bongo Bongo Land I will write to their ambassador at the Court of St James."
The government has protected the international aid budget from spending cuts.
Mr Bloom said: "What I would argue is that it is for the individual citizen, it's not for the likes of David Cameron to pick up our pockets and send money to the charities of his choice.
"If I want to send money to charity, I will do it of my own accord."
Mr Bloom said there were "people in this country who can't get treatment for cancer, there are people who are waiting in the queue for dialysis machines" and that "charity begins at home".
However, party chairman Mr Crowther told Sky News: "In my opinion it [Bongo Bongo Land] is a rather outdated description of foreign parts.
"To me it doesn't sound like anybody banging drums. It sounds like a shorthand way of saying places around the world which are in receipt of foreign aid.
"It's not in itself the right word to use and it could seem disparaging to people who come from foreign countries and that's why I've asked him not to do it again."
Mr Crowther told the BBC: : "It is lazy language, it is old-fashioned, and it is not language we want to hear used by our senior party members. That is a mistake Godfrey has made and he will not make it again."
For Labour, shadow international development minister Rushanara Ali said: "These are an offensive and narrow-minded set of remarks."
She added: "If Nigel Farage is serious about getting rid of racism and intolerance in his party, he should take action against UKIP politicians who think it's acceptable to refer to developing countries as 'Bongo Bongo Land'."
Laura Pidcock, from campaign group Show Racism the Red Card, told Today that "these crude stereotypes that see Britain as a civilised place and overseas as tribal" were "incredibly damaging".
The annual accounts for the Department for International Development show that £203.1m was spent on Pakistan in 2012-13.
They state that the largest amount of the money of 31.4% was spent on education, benefiting nearly two million schoolchildren, 21.1% on tackling "poverty, hunger and vulnerability", 14.2% on humanitarian aid - such as flood assistance, 12.6% on reproductive, maternal and newborn health and the rest on global partnerships, governance and security (including elections), health and wealth creation.
In 2010, Mr Bloom, a former investment manager, was ejected from the European Parliament for directing a Nazi slogan at a German colleague.
And in 2011, he said small firms would have to be "stark staring mad" to hire young women because of the risk of them taking maternity leave at a later stage.