A medical school play that featured a student actor blacking up and wearing a oversized dildo to make fun of a lecturer has led to a feeling of “segregation” between groups of different ethnic backgrounds at the university, a review has found.

The performance portrayed the lecturer as “a stereotypical, hyper-sexualised black man” and included other racist, sexist and homophobic jokes, the independent review concluded.

Thirty-two students were suspended from clinical practice after complaints were made about the play and a police investigation took place, but officers have decided to take no further action.

The independent review made 13 recommendations designed to help tackle the culture at Cardiff University’s school of medicine, including bringing in an outside reconciliation body to try to heal rifts between different groups of students.

The panel that drew up the report said it had heard that local doctors and other NHS workers perpetuated a “rugby culture” at the medical school and said the university as a whole needed to increase the diversity of its staff.

A fundraising revue has taken place annually at Cardiff medical school for decades but last year the show, Anaphylaxis, included the offensive depictions of a member of staff.

Eight students of African heritage complained. The report said the complaints led to a “major backlash”. Some of the complainants were told by their fellow students they were being “very and unduly sensitive” and that such things had carried on for a long time and they should accept “tradition”.

Complainants felt they were “ostracised” and some had decided to leave Cardiff. The report said: “The third-year medical student group are now divided to some extent by race and also between the complainants and those complained against. Students from both sides told the panel that, as a consequence of the situation they had lost friends.”

The complainants used the word “segregated” to describe their social life. They also said black students had been encouraged to attend the revue on a night when an actor was in “whiteface” and challenged them for not complaining about this.

One of the students who complained also had a “disturbing experience” in a clinical placement where a patient refused to see them because of their skin colour. The student felt that afterwards no support was available to them, the independent review said.

According to the report, the staff member who had been portrayed in the revue “spoke movingly and with quiet dignity about the distress that this had caused to them as well as their family”. It added: “They felt isolated and worried … This sense of alienation affected them profoundly.”

Two of the students who participated in the play stressed that it had raised nearly £1,800 for charity. They said a group of classmates had got together and written the script over a five-month period.

The report said: “These students now recognised that offence could be taken on the portrayal, though at the time they meant the performance and the revue to be comedic and ironic.”

It concluded: “The circumstances which gave rise to this inquiry are dispiriting and in some senses tragic. There are no winners and to a degree everyone has lost; albeit that those parodied, marginalised and victimised because of their sex or racial identities were quite properly the focus of the panel’s concerns.

“The panel’s observations raised some overarching issues about the apparent and disappointing lack of career progression of BME staff and their general negative perceptions in this regard.”

Cardiff University said it accepted all 13 of the panel’s recommendations. It said it had started working with an “external restorative organisation” following the controversy.

The vice-chancellor, Prof Colin Riordan, said: “We accept the report’s recommendations and are already undertaking a number of proactive measures to address them. It is important that we take the time to take stock and develop the appropriate policies and procedures in response. We fully accept, however, that we must do more.

“Our message is clear: offensive stereotyping of any person, or group of persons, is not acceptable. Cardiff University takes issues relating to equality and diversity very seriously and is committed to supporting, developing and promoting equality and diversity in all of our activities.”