Nigel Farage has bounced back from his decision not to stand in the Newark byelection as a new opinion poll found that Ukip was on course to achieve an emphatic victory in the European parliamentary elections next month.

The Ukip leader, who began the day denying that he was too "frit" to stand in Newark, was shown to be the dominant force in British politics at the moment after a dramatic increase in support for his party.

The ComRes/ITV News poll put support for Ukip at 38% for the European elections – an increase of eight points since the beginning of the month. Labour is down three points on 27% while the Tories trail in third place on 18%, down four points. The Liberal Democrats remain unchanged on 8%.

Tom Mludzinski, the head of political polling at ComRes, said: "Ukip look set to pull off something spectacular at next month's European elections."

But the poll is a mixed blessing for Farage. It also found that 32% of voters believed that Ukip was a racist party after a series of damaging revelations from candidates, including a call for Lenny Henry to leave Britain to live in a "black country" and the claim that Mo Farah is not British.

The finding that nearly a third of voters believe Ukip is a racist party will be a blow to Farage, who angrily rejects claims that his party is the "BNP in blazers". The poll also found that 33% of voters believed Ukip was more honest than other parties. But 38% disagree with this.

ComRes said a quarter of Ukip supporters for the European elections are unlikely to support the party at the general election. Photograph: Peter Macdiarmid/Getty

ComRes warned that Ukip's vote is soft because a quarter of its supporters for the European elections say they are unlikely to support it at the general election. "Nigel Farage has a massive task competing on the Westminster stage," Mludzinski said.

The findings will help to explain why Farage decided not to contest the Newark byelection, which was triggered by the resignation of the former Tory MP Patrick Mercer. Farage would have struggled to win the seat – Ukip won only 3.8% of the vote in 2010 – but in the unlikely event of a Ukip byelection victory, the ComRes poll suggested Farage would have lost it at a general election.

Farage said he had decided not to stand because he did not want to distract attention from the European elections. "We are just three weeks away from European elections where Ukip, I think, can cause a political earthquake. I want to focus the next three weeks on winning the European elections.

"I have no real connections with Newark. I would look like an opportunist and reinforce the impression that Ukip is a one-man band; we are trying to talk about British membership of the European Union."

Faced by the charge that he had showed political cowardice, he said: "I think I can be accused of many things in life but I do not think 'frit' is one of them. I am a fighter and a warrior but I am determined to pick my battles."

He promised that Ukip would throw the kitchen sink at the byelection and field a strong local candidate. "There is a much bigger prize than Newark, including the general election when we can win not one seat but many seats – even holding the balance of power."

Farage had told BBC reporters before announcing his decision that if Ukip won the seat, David Cameron would have to resign, but also conceded that if he lost, his "bubble" would burst. It appears he considered overnight the prospect of trying to win the seat, where Ukip came fourth in 2010, and decided he could not risk defeat.

'I have no real connections with Newark. I would look like an opportunist.' Photograph: Ian Forsyth/Getty

"It was only 12 hours ago that Patrick Mercer stood down so I haven't had long to think about it," Farage said. "But I have thought about it and we're just over three weeks away from a European election at which I think Ukip can cause an earthquake in British politics, from which we can go on and not just win one parliamentary seat but win quite a lot of parliamentary seats."

He added that there would be "pressure and splits within the Conservative party" after the European elections and "this may not be the last byelection that comes up between now and next May".

Ken Clarke, the cabinet minister and an MP in Nottinghamshire, reacted to Farage's announcement by saying: "He is not an idiot; he did not have the faintest chance of winning Newark. I don't think Ukip will get anywhere in the byelection. What on earth would Ukip contribute to the representation of Newark-on-Trent?"

He said Ukip supporters were not racist but that the party "does encourage bigotry and prejudice – what they're really peddling is a total nonsense".