It is a way of saying to ethnic minorities and the world that we not only tolerate but cherish our diversity

Lord Parekh

The commission has not been afraid to criticise government policy in some areas, despite being made up of a large number of Labour supporters.

Trevor Phillips, chair of the Greater London Assembly, and Labour peer Lord Bhikhu Parekh are among its members.

Policies on asylum seekers, including the dispersal and the voucher schemes, are condemned for creating "statelessness and racial and ethnic divisions".

An audit of the Stephen Lawrence report recommendations is called for

The report calls for a more compassionate and liberal approach to asylum seekers.

A series of recommendations are to be presented to Home Secretary Jack Straw at the report's launch on Wednesday.

But commission chair Lord Parekh said one of the first steps taken by the government should be the declaration that Britain is a multi-cultural society.

Australia, Canada and the US have already made such declarations.

"It is a statement of who we are. It is a way of saying to ethnic minorities and the world that we not only tolerate but cherish our diversity," Lord Parekh said.

It is also part of rethinking Britain's "national story", he added.

Commissioners spent two years examining evidence to produce their 400-page report, which looks at everything from policing to education and health.

Home Secretary Jack Straw will receive the report on Wednesday

The home office is already studying the report.

Minister Mike O'Brien said: "Many of the recommendations cover areas where action is in hand or under active consideration.

"In these latter cases the recommendations will feed into the development of such policies.

"Where there are new suggestions we will look at these with interest.

"The government is profoundly committed to racial equality and the celebration of diversity. We are a multicultural society."

Included in the series of recommendations are:

• An independent body to investigate complaints against the police

• Publicity campaigns to ensure that the public know their rights when stopped by the police

• An independent audit of progress implementing the recommendations in the Stephen Lawrence report

• Deaths in custody to be independently investigated

• Cash support for asylum seekers should not be less than basic income support level

• Government-set targets for reducing the number of pupils from particular community backgrounds excluded from school

• National working parties to examine race quality aspects of Ofsted inspections

The commission was set up by race equality charity the Runnymede Trust two years ago and is the most comprehensive review of equality issues since Labour came to power.

David Westwood, chairman of the Association of Chief Police Officers' race and community relations committee, said: "The report broadens the debate on the future of our society and the challenges facing multi-ethnic Britain.

"It also identifies the broad range of organisations that are critical to developing, building and sustaining harmonious communities.

"We are pleased therefore that the commission, under the chairmanship of Professor Bhikhu Parekh, recognises the police role in this future vision and the important part we have to play in ensuring a fair and equitable society."