Warning: This report contains offensive language.
Clarke used the term "coloured footballers" in a reference to black players when talking to members of the Department for Digital, Culture, Media and Sport (DCMS) select committee.
He apologised after being prompted to say sorry by MP Kevin Brennan.
Clarke had been talking via video link about the racist abuse of players by trolls on social media.
"People can see if you're black and if they don't like black people because they are filthy racists, they can abuse you anonymously online," he said.
He had earlier spoken of the need to attract people into the sport from a range of communities.
"If you go to the IT department of the FA, there's a lot more South Asians than there are Afro-Caribbeans. They have different career interests," said Clarke.
He prompted further criticism when referring to gay players making a "life choice" and a coach telling him young female players did not like having the ball hit hard at them.
"We can confirm that Greg Clarke has stepped down from his role as our chairman," said an FA statement.
"Peter McCormick will step into the role as interim FA chairman with immediate effect and the FA Board will begin the process of identifying and appointing a new chair in due course."
Following his resignation, Clarke said: "My unacceptable words in front of Parliament were a disservice to our game and to those who watch, play, referee and administer it. This has crystallised my resolve to move on.
"I am deeply saddened that I have offended those diverse communities in football that I and others worked so hard to include."
Clarke had been called to give evidence to the DCMS committee about the Premier League's potential bailout of English Football League clubs and the structural reforms proposed as part of 'Project Big Picture'.
Brennan said Clarke's language in reference to black players was the kind that did not encourage inclusion, while fellow committee member Alex Davies-Jones called it "abhorrent".
The equality charity Kick It Out said his remark should be "consigned to the dustbin of history" and criticised the comments by Clarke concerning people from South Asia, gay players and female footballers.
"As a person who loves football and has given decades of service to our game, it is right that I put the interests of football first," added Clarke in the statement confirming his departure.
"2020 has been a challenging year and I have been actively considering standing down for some time to make way for a new chair now our CEO transition is complete and excellent executive leadership under Mark Bullingham is established."
Speaking before the resignation, Sanjay Bhandari, executive chair at Kick It Out, said Clarke's comments to the DCMS were outdated.
"I was particularly concerned by the use of lazy racist stereotypes about South Asians and their supposed career preferences. It reflects similar lazy stereotypes I have heard have been spouted at club academy level," he said.
"Being gay is not a 'life choice' as he claimed too. The casual sexism of saying 'girls' do not like balls hit at them hard is staggering from anyone, let alone the leader of our national game. It is completely unacceptable."