The Department for Work and Pensions has been ordered to pay out nearly £400,000 after a Cardiff woman won her claim for race and age discrimination.
Anne Giwa-Amu told the BBC the department was "promoting a culture of racism".
The judge in her tribunal case said she had been a victim of deliberate and intended harassment by DWP staff.
The department said racism was unacceptable and it took the judgement "very seriously".
Warning: This report includes racist and offensive language
Anne Giwa-Amu, 59, who is mixed Nigerian and Welsh, joined the DWP branch in Caerphilly as a full-time administrative officer in 2017, after trying without success to start a small business.
She was the only non-white recruit and only trainee over the age of 50 in her cohort, according to documents from Cardiff Magistrates' Court seen by BBC News.
Judge Howden-Evans said DWP staff had deliberately created a "hostile environment" for Ms Giwa-Amu and has ordered the department to pay out more than £386,000 in compensation.
This includes £42,800 for injury to feelings, which is awarded in the "most serious" cases where there has been a lengthy campaign of harassment.
"It comes as a relief after what has been a harrowing experience for three years," Ms Giwa-Amu told the BBC.
"I've had to experience real financial hardship and the perpetrators were promoted despite how they had treated me."
A DWP official had violated her dignity by using racist language such as "Paki-lover" in her presence, the court found.
Another had further humiliated and discriminated against Ms Giwa-Amu by loudly laughing and telling her cohort he had "touched her bum".
Officials had also repeatedly accused Ms Giwa-Amu of stealing ice-cream, sprayed body-spray on themselves while next to her, and breached her confidence after she reported feeling "bullied".
Ms Giwa-Amu went on sick leave in March 2017 and was unlawfully dismissed in October that year for being unable to return to work, the court found.
She had been living off £55 a week and later had no money for food after her final pay cheque was withheld.
Ms Giwa-Amu told the BBC she has since been living with "immense stress and anxiety".
"Management at the DWP are paying lip service to the equality legislation," she said. "By protecting offenders, they are promoting a culture of racism."
The DWP has been ordered to contact the Equality and Human Rights Commission for diversity awareness training and its permanent secretary, Peter Schofield, must directly review her case.
Ms Giwa-Amu's solicitor, Lawrence Davies from Equal Justice, said DWP staff had "set out to destroy the confidence and wellbeing of a black employee with their appalling conduct".
"None of the white DWP staff have been disciplined and some have been promoted," he said.
"Given that the DWP serves a high level of ethnic minority claimants, the presence of prejudice in the state benefits system is of grave concern."
In a statement, the DWP said: "Racism is totally unacceptable and action will be taken against any staff found to be expressing such views.
"We take the judgement and the circumstances of this case very seriously."