The married couple from Yorkshire in northern England said they had been fostering children for seven years but have been told by social workers that they were not suitable because of UKIP's calls for curbs on immigration to Britain.
The married couple claimed they had their foster children taken away from them for joining the political party by Rotherham Metropolitan Borough Council, The Telegraph reported.
Social workers told the couple, who were caring for three children from ethnic minorities, that the party had "racist" policies and that their membership of it made them unsuitable carers.
The foster parents said they were left feeling "stigmatised and slandered".
The incident happened in September. Roger Stone, leader of the authority, today said "We are going to investigate to make sure everything has been done professionally. If the professionals give advice, we take it. We are going to investigate - we always would if somebody complains".
The case has provoked outrage from across the political spectrum with Labour leader saying: Being a member of UKIP should not be a bar to adopting or fostering children. "We need an urgent investigation by Rotherham Council into the circumstances of this case".
The three children, a baby girl, boy and an older girl from a troubled family, came to them in September on an emergency placement.
But just eight weeks later, two staff from the Labour-run Rotherham council