Birmingham currently asks employees to identify themselves as one of six ethnic types. But 30%-40% of staff refuse to answer the ethnicity question, Conservative group leader David Roy said.
The personnel department has fielded requests for an expansion of categories to include Irish, Sikhs and Kashmiris.
The report, which included a proposal to divide staff into 15 racial groups, was due to go to the personnel committee last week, but officers took it off the agenda saying it was still in draft form.
'There's nothing bizarre about the withdrawing of the paper - it's just that it wasn't ready for consumption,' she said.
The personnel department was revisiting the ethnicity question in its overhaul of the personnel information system, she said.
Its proposal for 15 separate categories, including Irish, Polish, Cypriot, Yemeni, Vietnamese and Kashmiri, followed the direction the government was taking in the 2001 census paper, the council said. Other proposals for classifications were also included.
'Increasingly, young people from mixed race backgrounds or second or third generation British find traditional classifications are not really up-to-date in how they view themselves,' Mrs Mallett said.
The Tory group condemned the proposal for 15 categories as too divisive and lacking in common sense.