In a documentary to be screened next week, the head of the anti-mass immigration, anti-European Union party said he would repeal "much of" the legislation introduced a generation ago to stop employers hiring staff on the basis of ethnicity and gender.
He said businesses were burdened with regulations and scrapping such laws would allow them to hire British workers -- from any ethnic background -- rather than immigrants to address the issue of unemployment among young Britons.
Asked if there should be redress for victims of racial discrimination, he said: "Yes of course, if people are being blatantly racist, but they're not.
"Let's stop beating ourselves up and saying we're a racist country, we're not. We've moved way, way, way beyond that."
He said: "I think employers should be able to employ people on ability... Let's try please to put the interests of unemployed black and white British youth first."
A spokesman for Prime Minister David Cameron, whose Conservative Party risks losing some of its lawmakers to UKIP in the May general election, said Farage was "wrong".
Opposition Labour justice spokesman Sadiq Khan said Farage showed "breathtaking ignorance" and said his proposal would take Britain back to the days when businesses put up signs saying they would admit "no blacks, no dogs, no Irish".
"We have made huge progress on tackling racial inequality and discrimination in this country... But things are still far from perfect," he said.
The Labour Party this week released figures showing that long-term unemployment among black and minority ethnic young people had increased by 49 percent since 2010.