The newly appointed Home Secretary once described "most" people who wave England flags in her area as being supporters of the English Defence League (EDL).
In a video clip circulating social media, Birmingham-born Shabana Mahmood added that these are "white", "male" and "bad people".
The Ladywood MP made the comments during a talk at the Labour Party Conference back in 2017.
She said: "The people you see holding the English flag most of the time down my neck of the woods will be the EDL and they are white and they are male and they’re bad people and they want to divide our communities from one and other."
In the full video, the former justice secretary however went on to say she would like to "claim the flag back from the bad guys".
She said: "But there is no reason for them to have claimed that flag - I would like us to claim our flag back from the bad guys."
Nile Gardiner, former aide to Margaret Thatcher, posted a clip of her comments to X and wrote: "Shocking remarks from the UK’s new Home Secretary."
A source close to Ms Mahmood said the video had been cut short to "mislead".
The Home Secretary made the remarks at a conference held in 2017
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They told GB News: "This video has been cut to purposefully mislead.
"As [the full] video shows, Shabana has always been proud of the flag and proud of this country.
"Those who seek to mislead are trying to divide us when she seeks to unite us."
It comes just days after Ms Mahmood was appointed as Home Secretary, replacing the now-Foreign Secretary, Yvette Cooper.
Shabana Mahmood was appointed as Home Secretary following a Labour Party Cabinet reshuffle last week
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Sir Keir Starmer's reshuffle of his Cabinet came after Angela Rayner's stamp duty scandal prompted her resignation.
On her first full day in office Ms Mahmood was confronted a shocking introduction to the small boats crisis, after more than 1,000 migrants crossed the Channel illegally.
She was quick to make her stance on illegal immigration clear as she took to her new role, saying: "These small boats crossings are utterly unacceptable and the vile people smugglers behind them are wreaking havoc on our borders.
The newly appointed Home Secretary has labelled small boat crossings 'utterly unacceptable'
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“Thanks to our deal with France, people crossing in small boats can now be detained and removed to France and I expect the first returns to take place imminently.
“Protecting the UK border is my priority as Home Secretary and I will explore all options to restore order to our immigration system.”
In her third full day in the job, Ms Mahmood held discussions with Britain’s “Five Eyes” allies – America, Australia, New Zealand and Canada – on “co-ordinated action” to tackle irregular migration.
She revealed Britain could suspend visa for countries that do not agree to return deals for migrants and pledged to do "whatever it takes" to stop small boat crossings, as numbers reached more than 30,000 so far this year.
At a meeting with ministers from the alliance in London, she said: “For us, that means including possibly the cutting of visas in the future.”
She added: “We do expect countries to play ball, play by the rules, and if one of your citizens has no right to be in our country, you do need to take them back.”