White working class voters are being "tempted" by the British National Party as they feel Labour is not listening to their concerns, a minister has said.
The MP has been campaigning to counter BNP efforts
Employment minister Margaret Hodge said the BNP could win seats in her Barking constituency in May's council polls.
She said the area's "difficult" change from a white area to a multi-racial community had caused some people to seek out "scapegoats".
The BNP said Labour were ignoring fears over "mass immigration" to the UK
In last year's general election the BNP polled third in Barking, east London, receiving 17% of the vote.
Mrs Hodge told BBC Radio 4's The World This Weekend: "The political class as a whole is often frightened of engaging in the very difficult issues of race and...the BNP then exploits that and try and create out of a perception a reality which is not the reality of people's lives."
She added that Labour had to promote its achievements to the electorate.
"We also have to go out and say very, very strongly the benefits of the new, rich multi-racial society which is part of this part of London for me."
She said the change from a white working class community to a multi-racial community was "difficult".
"In that context, if people find there are things they can't access, you very quickly look for a scapegoat. That is what is happening," Mrs Hodge said.
"If we are to counter that perception - which the BNP seek to exploit and Migrationwatch fans - if we are to counter that we need to go out and we need to engage in a very direct way with all our voters."
The Sunday Telegraph reported that Mrs Hodge said many constituents were angry at the lack of housing and asylum seekers being housed in the area by inner London councils.
Mrs Hodge told the paper she has been out campaigning two days a week in an attempt to counter the BNP efforts.
She has found that as many as eight out of 10 white families admit they are tempted to vote BNP.
"That's something we have never seen before, in all my years. Even when people voted BNP they used to be ashamed to vote BNP," she said.
The BNP said the party had been demonised by the "far left" for talking about immigration.
BNP spokesman Phil Edwards said: "People are being tempted by the BNP because Labour and the Tories don't have any inclination to debate the effect of mass immigration on communities in Britain.
He went on: "In a democracy we should have all opinions. We should debate whether mass immigration is a good thing."
The BNP said Labour was "culpable, it's mainly their fault that people in places like Dagenham and Barking have become so alienated."
He said that it was up to the BNP to "sort out the mess that Labour has created".