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The new act forbids discrimination on the "grounds of colour, race, or ethnic or national origins" in public places and covers both British residents and overseas visitors.
But there have already been claims by anti-racist groups and Labour backbenchers that the new law does not go far enough, as it does not cover housing or employment.
The new law does not make racial discrimination a criminal offence - and only the very worst offenders will be referred by the Attorney General to county court.
Conservative opponents of the law forced the change from a proposed criminal offence to a civil offence.
They feared making racial discrimination a crime would only exacerbate race relations in areas where it was already a problem.
But Labour backbenchers wanted the new law to go further to penalise employers who discriminated against applicants on the grounds of race, and local authorities which barred people renting council homes because of their ethnic background.
The new law applies only to "places of public resort" which include hotels and restaurants - but excludes private boarding houses.
Shops are also excluded from the new act.
Acts of discrimination include refusing to serve a person, an unreasonable delay in serving someone, or overcharging.
Under the terms of the act, a Race Relations Board will be set up to monitor the work of local conciliation committees which will consider any complaint of discrimination.
They will be encouraged to negotiate with the parties involve and seek to persuade them against further discrimination.
In cases where the discrimination continues, the matter will be referred to the Attorney General or in Scotland to the Lord Advocate, who will then apply for a court injunction.
The new law comes into force as the number of immigrants to the country continues to rise.
Figures for 1964 show British citizenship was granted to 5,943 people from Commonwealth countries, the Irish Republic and the Republic of South Africa.
The Race Relations Board was established in 1966 and published its first annual report in April 1967 calling for the act to be extended to cover discirmination in housing, employment and financial facilities such as mortgages and car insurance.
Of the 327 complaints made to the board, 238 were considered to be outside its jurisdiction.
Mark Bonham Carter was appointed first chairman of the Race Relations Board. He served as a Liberal MP from 1958-9 and later became vice-chairman of the BBC. He was an uncle to the actress Helena Bonham Carter.
In October 1967 a 17-year-old member of the National Socialist Party was found guilty at Middlesex Area Sessions in the first case brought under the incitement section of the Race Relations Act.
The law was tightened up in 1968 when racial discrimination was extended to include employment and housing.
It was further extended in 1976 when for the first time it identified direct and indirect discrimination and also established the Commission for Racial Equality.
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