There's not a single non-white Australian shown in the group surrounding Shorten as he declares a "Shorten Labor Government will build Australian first, buy Australian first and employ Australians first".
"It's not the sort of ad I want my party to be promoting".
Labor frontbencher Anthony Albanese said he had not seen the ad before it aired on the Nine Network on Sunday night.
"I am not in the business of making ads", he said.
The new TVC appeared on Channel Nine last night in marginal electorates.
Mr Shorten earlier told reporters he did not believe the ad was racist and it was important the issue of visas for overseas workers was highlighted, but would speak to the Labor party about it.
Mr Shorten later tweeted the criticism was a "fair cop". "I'm a member of the ALP national executive, I can assure you I hadn't seen it", he told reporters in Canberra today.
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"I certainly think we need to encourage as much diversity as we can".
Shorten told the media the lack of diversity was "a bad oversight".
Eleven of the 12 people who stand next to the Labor leader in the commercial are Caucasian.
The NSW MP said Mr Shorten had a pattern of xenophobia, including his campaigning against the Chinese free trade agreement, Japanese submarines and the Chinese acquisition of NSW's electricity poles and wires.
Mr Albanese said he understood the ad had been withdrawn.
Speculation is rife the ad is an appeal to those anxious about multiculturalism, or a none-too-subtle pitch to some voters of Pauline Hanson's One National party or the Australian Conservatives.
Others have put it down to just sheer incompetence on the part of the ad agency that produced the ad.
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