A Manchester radio station has been fined £125,000, the largest penalty yet for UK radio, after a presenter made a string of racist comments and joked about the death of Ken Bigley.

Piccadilly Radio, the commercial service based in Manchester, has been fined over late-night phone-ins on its station Key 103. Listeners complained that the comments, made by presenter James Stannage, were offensive, racist, and incited racial hatred.

Broadcasting watchdog Ofcom said the material was some of the most offensive it had heard.

"In particular, the presenter's continual focus on race and religion, as forms of abuse, caused grave concern,"it said.

Stannage was dismissed earlier this year over the comments made in October and November last year.

Piccadilly Radio admitted the broadcasts were "totally unacceptable".

The presenter made jokes and comments about Bigley, the British hostage captured in Iraq, two days after his death was confirmed. He made "highly abusive comments concerning Muslims and used a mock Asian accent", abusing the religion of the callers and mocking Islamic traditions.