A former Lord Mayor of Birmingham has been accused of telling a woman she was not a suitable inner-city Labour Party candidate because she is “white and Jewish”.

Coun Mahmood Hussain, who served as Birmingham’s first Asian Lord Mayor seven years ago, is alleged to have made the comment to Elaina Cohen who wanted to stand in the East Handsworth and Lozells by-election.

Ms Cohen, who is the former partner and current assistant to Perry Barr Labour MP Khalid Mahmood, has made an official complaint to both the Labour Party and Birmingham City Council. Yesterday, Coun Hussain denied her claim and said he would never make such a comment. Coun Hussain was himself the target of racial abuse during an official visit to Kingstanding Library while serving as Lord Mayor in 2002.

He said: “I do not think it would be appropriate for me to comment on any complaint. But I would not make those sort of comments.”

Ms Cohen said in her complaint, sent to Labour Party general secretary Ray Collins, she was “deeply hurt and shocked”.

Her claim has been backed by local community worker Lorraine Briscoe, who said she overheard what was said on a carphone speaker as Ms Cohen talked with Coun Hussain, chairman of the Perry Barr Constituency Committee. Ms Briscoe, who runs the South Aston Community Association, said: “I was disgusted that a councillor could make comments like that in 2009. He told her ‘my Muslim members don’t want you because you are Jewish’. Elaina does a lot of good work in this community and she does not see race or religion, she just sees people.”

The East Handsworth and Lozells seat is one of Labour’s safest on Birmingham City Council and a party candidate can be almost certain of victory in the by-election on June 4.

Members of the local Labour Party were presented with only one candidate for the vacant seat, Hendrina Quinnen, who was duly selected by an almost unanimous vote. There were two other applicants, Elaina and local Labour Party officer Camille Ade-John. Both were rejected at a pre-selection meeting after failing to gain the support of a local party panel.

Regional Labour Party official Ian Reilly confirmed that the complaint would be investigated.