Eric Robinson, who is aboriginal, has already apologized for the remark and will remain in cabinet, Selinger said.
"He's staying in cabinet because he's done a good job on the issues that he's been responsible for," Selinger told reporters.
The Opposition Progressive Conservatives have been calling for Robinson's resignation since the comments came to light last week. They are contained in an email Robinson wrote to a government staff member about a burlesque show to raise money for the Osborne House women's shelter.
Robinson wrote that the event demonstrated "the ignorance of do-good white people without giving it a second thought."
Robinson, who is also the minister responsible for aboriginal affairs, repeated his apology Monday. But he stood by his belief that a burlesque show was an inappropriate way to fundraise for a women's shelter and suggested he has a right to express his feelings.
"I think I'm entitled to say that because I experienced racism first-hand," said Robinson, who went through to a residential school as a child.
"I apologized. It was a poor choice of words. Maybe I should have used non-aboriginal (instead of white)."
The CEO of Osborne House, Barbara Judt, has filed a complaint with the Manitoba Human Rights Commission.
Earlier this month, another New Democrat legislature member, Dave Gaudreau, was lightly reprimanded for a remark made in the legislature chamber. Gaudreau said he had seen a Tory member with "a male friend" at a cultural festival.
Gaudreau apologized for what many saw as a homophobic slur. Selinger stripped him of his role as NDP caucus treasurer and forbade him temporarily from asking questions in the legislature.
Selinger confirmed Monday that Gaudreau was stripped of non-paying duties and his salary is not affected.
Tory Leader Brian Pallister said Selinger has been too reluctant to clamp down on his caucus.
"This premier has missed numerous opportunities to show leadership, and increasingly it's evident that members — not only of his backbench but of his cabinet — are not behaving appropriately."