Hunter repeatedly used the word, including in jokes about Luis Suarez, on the night when Gareth Bale won both the senior and young player PFA awards.
English football has been rocked by race storms in recent seasons involving the likes of John Terry, Anton and Rio Ferdinand, Ashley Cole and Suarez who was banned for eight games for a racist slur directed at Manchester United's Patrice Evra.
American comedian Hunter is a popular figure on the British comedy circuit and regularly appears on British TV shows such as 'Have I Got News for You' - before the dinner the PFA had boasted that he would "bring his unique style of no nonsense comedy to the event."
However, after listening to Hunter's risqué set, Carlisle conceded that booking the comedian was a "gross error of judgement."
"As the chairman I am embarrassed. I apologise unreservedly and it won’t happen again on my watch," he said.
"I thought that we made a really gross error of judgement in who we selected for our entertainment last night. I was embarrassed.
"All that has gone on in football over the past few years, with everything that we purport to stand for, his set was inappropriate, it really was.
"I am probably going to get hung for it. But I can’t be hypocritical. Everything that I have said and stood for over the past three years, if I sit here and say 'It’s in the name of comedy' - rubbish, I am not having that.
"Some people were really offended and we as a union should not put anybody in that position. We have our values and ethics. We shouldn’t sit people at our showpiece event of the year and put them in a position where they may well be offended and where words are used where we have actively campaigned for people to be sanctioned."
Lord Ouseley, of anti-racism group 'Kick It Out', has demanded that the PFA explain themselves.
"It sounds to me that the PFA needs to answer questions about how they booked this person and why they booked this person," he told the Telegraph.
"I’m surprised there wasn’t a mass walkout. It almost begs the question, 'Why does Kick It Out bother?'"
Carlisle confirmed he has already talked to 'Kick It Out' about the issue:
"I got a call from Kick it Out and they asked what I was going to say and do about this. I said to them if they feel they have an issue or something to say, go out and say it and we will have to deal with it. I feel so strongly about this and so embarrassed that I am putting my position out there and when we have our discussions we will see what comes," he told Talksport.
PFA chief executive Gordon Taylor added: "I think there were a few raised eyebrows over the comedian, but that is the sort of thing you can't control. It was unfortunate.
"He is a professional comedian. It's a difficult subject in football and with him not being fully aware of how emotive it has been in football, that was probably a difficulty for him."
- Sports & Recreation
- Luis Suarez