The Observer has removed a controversial column by Julie Burchill, in which she attacked transgender people, from the internet, and editor John Mulholland has published an apology, admitting that the newspaper "got it wrong".

Burchill, a freelance writer, wrote in an Observer column on Sunday that transgender people were "screaming mimis", "bed-wetters in bad wigs" and "dicks in chicks' clothing".

The column, published online on theguardian.com's Comment is Free website, has been taken down with the link now directed to a statement from Mulholland in which he apologises for the offence caused in what has become a "highly charged debate".

"We have decided to withdraw from publication the Julie Burchill comment piece 'Transsexuals should cut it out'," he said. "The piece was an attempt to explore contentious issues within what had become a highly-charged debate. The Observer is a paper which prides itself on ventilating difficult debates and airing challenging views. On this occasion we got it wrong and in light of the hurt and offence caused I apologise and have made the decision to withdraw the piece."

He said that the Observer readers' editor, Stephen Pritchard, will "report on these issues at greater length".

Burchill's piece was written in defence of her friend and fellow writer, Suzanne Moore, who attracted hostility on Twitter last week for suggesting in a New Statesman article that women were too often expected to look like "a Brazilian transsexual".

Late on Monday Burchill posted a comment on her Facebook profile – she has almost 1,900 "friends" – saying: "Just spoke to Suzanne and she isn't under the impression she's apologised AT ALL. Also a nice chat with the lovely editor of the Observer, John Mulholland. The piece is being taken down, fight fans!"

When asked by one of her Facebook friends if she was going to apologise, she said: "I've been apologising all day."

Lynne Featherstone, the Lib Dem MP and international development minister who formerly held the government's equalities brief, on Sunday took to Twitter to denounce Burchill and called for the Observer to sack her.

The online version of Burchill's column had attracted several thousands comments by Monday lunchtime, with the majority opposing the writer, while the argument on Twitter raged for and against her.

Guardian News & Media, publisher of the Guardian, Observer and the theguardian.com website network – including MediaGuardian – had earlier issued a statement saying it had asked the readers' editor to investigate the matter.

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