The press regulator has ruled the Times "distorted" its coverage of a five-year-old Christian girl who was placed with Muslim foster carers.
The newspaper ran three front-page stories in August 2017 after the girl was removed from her mother's care by Tower Hamlets council in east London.
It said foster carers stopped her eating bacon, confused her by speaking Arabic, and removed a crucifix.
A Times executive acknowledged the story caused "enormous offence".
The complaint was made by Tower Hamlets, which had taken the child into care.
The council said a front-page headline, "Judge rules child must leave Muslim foster home", was misleading because it had sought to move the child to live with her grandmother - who herself had a Muslim background.
The judge had already ruled that the girl had been given "warm and appropriate" care by two foster families.
A council investigation - whose findings were agreed by all the parties in the case - found the allegations raised in the Times had been unsubstantiated.
The Times mentions the Independent Press Standards Organisation ruling on the front page of Wednesday's paper and publishes the full adjudication on page two and online.
The Independent Press Standards Organisation ruled the paper should publish the adjudication on page six or more prominently, as well as on its website.
On Tuesday, Ian Brunskill, the paper's assistant editor, addressed the Commons Home Affairs Committee investigation of the reporting of minorities.
He said the paper's reporting had caused "an enormous amount of trouble for us, for other people."
He added: "It's caused enormous offence, it's caused enormous upset."
But he denied the paper had set out to cause offence.
"The suggestion that we might have set out to do that is frankly absurd," he said.
The chief executive of Tower Hamlets council, Will Tuckley, said it had complained because it wanted to defend its own foster carers.
He said: "From the start we had concerns about the validity of the allegations about the foster carers.
"For example one allegation was that they did not speak English, even though that is a prerequisite for any foster carer.
"The allegation that the foster placement was a bad choice by the council was also found by Ipso to be distorted information."
The Muslim Council of Britain said it was the first time a story relating to Islam had been corrected on the front page of a newspaper.
Harun Khan, the organisation's secretary general, said: "It is about time the Times was forced to apologise for promoting what was widely known to be an inaccurate, misleading and bigoted narrative about Muslims.
"We hope that this will mark a turning point in the tolerance the Times has shown for anti-Muslim bigotry in its coverage and commentary."