The joke, in this month's edition of the Creswick District News, involved a husband scratching off a Hindu woman's "dot" to reveal which job he would be able to take in Australia.

The Creswick District News is run by a not-for-profit community group.

President of the Creswick District News Association Bob Orr said the joke was "slipped in" during a last minute glitch. "I wish it never happened. I wish it never appeared there," he said.

"We will, in our next edition, record a note that it's not appropriate.

"We will also hopefully have an item from a person who had organised to provide information on why the forehead dot is significant to Indian people."

Mr Orr said the committee and editorial staff had been unaware of the joke, which a production person slipped onto the page at the last minute to fill a space.

"I don't know where it came from. I have no idea how we got it in the first instance," he said.

Shire mayor and Creswick business owner Janine Booth said the joke showed a lack of judgment on behalf of the person who placed it into the newspaper.

She said the newspaper had proper processes in place, but in this case they had not been followed.

"Hepburn Shire Council prides itself on its diverse community and this can be seen in many of the wonderful community activities that take place regularly across the shire," she said.

"The Creswick District News is published by a community-based committee and, while we have no formal links to the group, we encourage all our residents and volunteers to continue to show the consideration and respect for all cultures that has made our shire such a wonderful place to live and work."

Cr Booth said the incident was "unfortunate" as the people who worked on the newspaper were "very sincere volunteers."

Councillor Don Henderson said racism did not belong in the shire or the country.

"I condemn any sort of racism by any person whatsoever," he said.

The offensive joke was published just days after two Indian taxi drivers were bashed in Ballarat.