Confirming her resignation this afternoon, Ms Champion said: "I apologise for the offence caused by the extremely poor choice of words in The Sun article on Friday.
"I am concerned that my continued position in the Shadow Cabinet would distract from the crucial issues around child protection which I have campaigned on my entire political career. It is therefore with regret that I tender my resignation as Shadow Secretary of State for Women and Equalities."
The column penned by Ms Champion was written in the wake of news that 18 members of a grooming gang in Newcastle were convicted of offences including rape, assault, supplying drugs and trafficking for prostitution.
The defendants were mainly British-born Muslims and belonged to the Pakistani, Bangladeshi, Indian, Iraqi, Iranian and Turkish communities, while their victims are believed to be mainly white British girls and young women. The convictions followed similar patterns of abuse in Rotherham, Rochdale and Oxford.
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In it she said: "Britain has a problem with British Pakistani men raping and exploiting white girls.
"There. I said it. Does that make me a racist? Or am I just prepared to call out this horrifying problem for what it is?
"For too long we have ignored the race of these abusers and, worse, tried to cover it up.
"No more. These people are predators and the common denominator is their ethnic heritage."
Earlier today, The Guardian reported that Ms Champion was attempting to distance herself from the column, claiming she did not write the headline or opening sentences, which she said were 'stripped of any nuance about the complex issue of grooming gangs, which have exploited thousands in my constituency'.
But a spokesman for The Sun said Ms Champion's press team had approved the column, and said they were 'thrilled' with it.
Responding to Ms Champion's resignation, Jeremy Corbyn MP, Leader of the Labour Party, said: "I have accepted Sarah Champion's resignation and thank her for her work in the Shadow Cabinet. I look forward to working together in future."
In response to Ms Champion's column, Trevor Kavanagh, a senior writer for The Sun, said MPs had to tackle what he referred to as the 'Muslim problem,' and praised Ms Champion for being prepared to speak out on the issue.
Over 100 cross-party politicians, including Ms Champion, signed an open letter to the newspaper condemning the column for using 'Nazi-like language' regarding the Muslim community in Britain, coordinated by the Labour MP Naz Shah.
Ms Champion responded to Mr Kavanagh's column by saying she was horrified to learn she had been praised in a 'repulsive and extreme Islamophobic' column.
Labour members have also called on the party leader, Jeremy Corbyn, to sack Champion from the front bench through Twitter.
Paul Cotterill, a Labour councillor in West Lancashire, branded Ms Champion's column 'a sinister piece of propaganda'.
In 2014, a major report detailed how at least 1,400 children were sexually exploited in Rotherham over a 16-year-period, sparking nationwide outrage, led by Professor Alexis Jay.
The inquiry team noted fears among council staff of being labelled 'racist' if they focused on victims' descriptions of the majority of abusers as being 'Asian' men.