Cricket stood on the brink of what is being described as the biggest crisis since Bodyline last night after India suspended their tour to Australia over a three-match ban handed to Harbhajan Singh for alleged racist abuse.

The squad remained in Sydney, the venue of the acrimonious second Test match, which finished on Sunday, instead of heading to Canberra as management prepared a formal response. They had until 4pm today local time (5am GMT) to lodge an appeal amid fears that they may pull out of the tour halfway through the four-Test series. Niranjan Shah, the secretary of the Board of Control for Cricket in India (BCCI), called the Harbhajan verdict a “blatantly false and unfair slur”.

After a four-hour hearing, Mike Procter, the match referee, upheld a complaint that Harbhajan had described Andrew Symonds, the Australia all-rounder, as “a monkey”. Symonds was supported by Ricky Ponting, Adam Gilchrist, Michael Clarke and Matthew Hayden, his teammates. Sachin Tendulkar, who had been batting with Harbhajan at the time, backed his 27-year-old colleague.

Procter took legal advice from Nigel Peters, a British barrister, before making his decision. He is thought to have been under pressure from Malcolm Speed, the chief executive of the International Cricket Council (ICC), the world governing body, to clamp down on alleged misbehaviour after finding Yuvraj Singh not guilty of dissent in the first Test. Procter last night backed his latest ruling. “I am South African and I understand the word ‘racism’,” he said. “I have lived with it for much of my life and this was not a case of just taking the word of an Australian over an Indian. I stand by my decision and believe the process was fair.”

M. V. Sridhar, the India media manager, described Procter’s conclusion as “troublesome and hurtful”. He explained that the party stayed in Sydney to wait for the official ban documents from the ICC. Canberra is scheduled to host a two-day friendly starting on Thursday, but more eyes are on the third Test in Perth that starts a week tomorrow.

The ban will not come into effect until after the appeal, but India are keen for the matter to be resolved before the series can resume. They have also claimed that Brad Hogg, the Australia bowler, called one of their team “a bastard”, a highly offensive term in India.

Confusion began to surround the future of the tour when Sharad Pawar, the president of the BCCI, said that his organisation, which will hold an emergency meeting today, was “giving serious thought to whether we should continue”.

In a subsequent statement, Shah said: “The Indian board realises the game of cricket is paramount, but so, too, is the honour of the Indian team and . . . every Indian.”

Procter was also match referee at the Brit Oval in 2006, when Pakistan conceded the Test to England having been penalised for ball-tampering.

Pakistan decided to press ahead with the tour, but the bad publicity harmed the image and integrity of the sport.

An impasse between Australia and India would have even greater repercussions, with one team by far the best in the world and the other the financial powerhouse.

The potential implications of the stand-off, which has been dubbed “Bollyline” in reference to the most famous of all sporting disputes in 1932-33, quickly became clear as, in Bombay and elsewhere, effigies of Procter and others associated with the furore were burnt in the streets.

Unfair dismissal?

What happened in Sydney:

- Ten balls after tea on the third day of the second Test, Harbhajan Singh hits a ball from Mitchell Johnson in front of mid-wicket for four to register his fifty.

- In the next over, Harbhajan hits Brett Lee for four and as he returns to the crease, he appears to pat Lee on the backside. Andrew Symonds, fielding near by, remonstrates with Harbhajan and the two exchange words.

- Mark Benson, the umpire, speaks to Harbhajan, covering his mouth so that viewers cannot read his lips. After the close of play, Ricky Ponting, the Australia captain, complains that Symonds was racially abused and Harbhajan is reported to Mike Procter, the match referee.

- In a hearing on Sunday, Harbhajan is banned for three Tests for a Level 3 offence. There are suggestions that he called Symonds a “monkey”.

What happens next?

- India have lodged an appeal against the ban.

- The ICC has 48 hours from receiving the appeal to appoint a member of the 17-man ICC Code of Conduct Commission from a country other than those playing the match to hear the appeal. It will be heard and determined within seven days of the commissioner’s appointment.

- In the meantime, Procter must provide a written statement to the ICC, with a copy sent to Harbhajan.