The equalities watchdog is lose its remit to promote "good relations" between ethnic and social groups.
Home Secretary Theresa May has published a report which proposes to scale back role of the Equality and Human Rights Commission. It will also lose powers such as making grants.
A Home Office insider said: "The Commission clearly has too many duties and responsibilities and this is not fair on the other watchdogs - we have to be seen to be exercising egalitarian principles too.
"We will take some of these duties from the Commission and share them out among other organisations who don't have so many. Then everyone can play nicely together.
"Obviously, if any of the watchdogs gets too excited and doesn't behave with their new duties, we will take them away and give them to someone who knows how to behave."