Red Bull Racing have suspended Formula Two driver Juri Vips pending an investigation after the Estonian used a racial slur during a live stream, the team announced on Tuesday.

"Red Bull Racing has suspended junior driver Juri Vips from all team duties with immediate effect, pending a full investigation into the incident," it said.

"As an organisation we condemn abuse of any kind and have a zero-tolerance policy to racist language or behaviour within our organisation."

Vips, 21, later apologised in a message posted to Instagram and said he would fully cooperate with the investigation.

"I wish to unreservedly apologize for the offensive language used during a live gaming stream earlier today," he wrote.

"This language is entirely unacceptable and does not portray the values and principles that I hold. I deeply regret my actions and this is not the example I wish to set."

Vips, who drives for the British-based Hitech Grand Prix team in Formula Two, is seventh in the standings.

Last month he drove Red Bull's Formula One car during Friday's practice ahead of the Spanish Grand Prix.

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