A mayor who was suspended from the Conservative Party over a “racist” post did not breach the council’s code of conduct, a local authority said.
Walsall councillor Rose Martin was condemned for sharing the offending image on WhatsApp earlier this month.
An independent review concluded she had not breached the councillor’s code and would face no further action.
The decision sparked an outcry among opposition councillors who branded it “a huge slap in the face”.
Ms Martin had only recently been elected mayor when she was suspended by the Conservatives for six months.
She was also required by the party to undertake diversity training as well as make an apology to the party board.
She had shared a picture showing five black children looking at a white child under the caption: “First day at school for a Ukrainian refugee in South London”, although later claimed to have been hacked.
In a statement, Conservative-run Walsall Council said an independent investigation had found there had been no breach of its code of conduct.
However, Labour leader Aftab Nawaz told the Local Democracy Reporting Service he was stunned by the decision.
“We are shocked,” he said. “The decision is a huge slap in the face.
Councillor Nawaz said Labour would call for Ms Martin, who remains in post as an independent, to consider her position at the next full council meeting.
Conservative council leader Mike Bird said the review had been “totally and utterly independent”.
“There isn’t have a racist bone in Councillor Martin’s body,” he added. “It’s caused her great anxiety and distress”.
Mr Bird said he would be contacting the party to inform them about the report.
Councillor Martin was unavailable for comment.