Leading members of the gay business community are calling for the resignation of a councillor accused of saying homosexuals were all paedophiles.

Tory councillor Peter Willows, who represents Hangleton and Knoll ward on Brighton and Hove City Council, sparked a storm of protest when he made the offensive comment at a mayor's reception at the Royal Pavilion last week.

Mr Willows has admitted making the remark but excused his behaviour by claiming he was drunk at the time. He has said: "I don't have the same hatred for the gay community that I do for paedophiles. But I don't like them."

He is now facing a police investigation and an independent inquiry by the Standards Board.

The Conservative group on the city council has suspended him from sitting on council committees while the investigations into his comments continue.

The gay and lesbian business community in the city is now demanding the long-serving councillor step down from his elected position on the council.

In an open letter to The Argus, a total of 27 well-known gay and lesbian business people, hoteliers, pub and club owners and entertainers in the city demand his resignation.

The letter states: "We call on Councillor Willows to resign from the council. He is not fit to make decisions which affect the city's 35,000 LGBT (lesbian, gay, bisexual and transgender) population."

The signatures include Tony Chapman, from Legends, Andrew Roberts, from Revenge, Andrew Kay from Latest Homes, dentist Chris Gull, Kim Lucas, from the Candy Bar nightclub, Sam Milford, from online gay magazine Realbrighton.com and entertainer David Raven.

The letter was organised by the Brighton Gay Business Forum, which has more than 100 members.

It brands the councillor's comments as an insult to the LGBT community. It says the comments are inflammatory language intended to incite hatred and urges the police to investigate.

The letter states: "Whilst collectively we are supporters of all political parties and indeed none, we cannot help but note that repeated comments have been made against the city's diverse communities by Peter Willows.

"We ask the leaders of all the political groups of the city council to reassert the commitment of the council to continuing the progress made in recent times with the city's diverse communities. This work must not be deflected as a result of these comments."

James Ledward, of G-Scene magazine, who also signed the letter, said: "Every major player on the gay and lesbian scene has responded. I think people are genuinely concerned and fed up with people in positions of power getting away with spouting their bigoted nonsense."

Conservative party leader on the city council Brian Oxley refused to comment on the letter. He said: "Pending the investigations we are not making any further comment."

A police spokeswoman said: "We have taken statements and we are investigating to see if any breach of public order offences have been committed."

Mr Willows was not available for comment.