The Conservatives have suspended a number of members over claims of Islamophobic social media posts.
The Guardian says it has seen details of racist content posted, shared or endorsed by 25 sitting and ex-Tory councillors.
The Conservatives say they take "swift action... on not just anti-Muslim discrimination, but discrimination of any kind".
But in a tweet Labour accused the party of "showing their true colours".
The Guardian says it handed a dossier containing the allegations, produced by an anonymous Twitter user, to the Conservative Party.
Cabinet Office minister Michael Gove reiterated the party's pledge to hold an investigation into Islamophobia and other forms of prejudice within the party, and promised it would start before the end of the year.
A Conservative spokesperson said the individuals named in the dossier had been "suspended immediately, pending investigation".
"The Conservative Party will never stand by when it comes to prejudice and discrimination of any kind.
"That's why we are already establishing the terms of an investigation to make sure that such instances are isolated and robust processes are in place to stamp them out as and when they occur."
It is understood not all the names provided in the dossier are members of the Conservative Party, but the party was unable to say how many members had been suspended.
Responding to the disclosures, the Muslim Council of Britain said Islamophobia was "endemic" in the Conservative Party.
It comes as the Conservative Party faces calls to hold an independent inquiry into Islamophobia following incidents highlighted to the party and in the media.
Earlier this year a number of Conservative Party members were suspended, after the BBC highlighted 20 cases to the party of members posting or endorsing Islamophobic material online.