Social Democrats TD Eoin Hayes looks set to stay in the parliamentary party after leader Holly Cairns backed him to remain.
It comes after he apologised yesterday for what he said was a "completely inappropriate" Halloween costume he wore in 2009, when he put brown makeup on his face and hands to dress up as Barack Obama.
Speaking at her party's think-in in Dublin, Ms Cairns said that while what happened was "extremely disappointing and embarrassing", it did pre-date his time in politics by some years.
"I want to be clear that it's not an excuse, but the context of it being 16 years ago is something that I have to consider and I am taking it into consideration," she said.
"Eoin himself said that he should have known better but he did not."
Mr Hayes, a TD for Dublin Bay South, has said that he takes full responsibility for his actions and apologised for any hurt caused.
He did not attend the party think-in today, something Ms Cairns said was his own decision.
"I think it was the right decision to not come and distract from the issues of the day," Ms Cairns said.
Mr Hayes was readmitted to the party in July following a seven-month suspension.
This was caused by him supplying incorrect information on when he sold his shares in his former employer Palantir Technologies.
Palantir has a number of IT contracts with Israel and US military.
Speaking on RTÉ's Morning Ireland programme earlier, Ms Cairns said that there was "no way to sugar coat" Mr Hayes wearing 'blackface' 16 years ago.
She said that she found out about the incident last night from the media and not from Mr Hayes.
She said they then had a "brief" conversation about it and that she was due to speak to him further about it.
Ms Cairns said she was "hugely disappointed" to be talking about the issue on her first day back from maternity leave.
"I just want to be clear that blackface is a form of racism," she said. "And in the Social Democrats, we abhor all kinds of racism.
"So, I'm glad that Deputy Hayes has acknowledged that, taken full responsibility for it," she said.
