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Sarah Champion faced a backlash after writing in The Sun that "Britain has a problem with British Pakistani men raping and exploiting white girls".
She quit her role as shadow equalities minister and apologised for her "extremely poor choice of words".
Mr Javid claims she was forced out by Labour leader Jeremy Corbyn.
But Mr Corbyn insists it was her own choice to stand down, albeit one that he supported.
He told LBC radio: "I think she was right to step down. In her words, she said, her continued presence there would be a distraction.
"We cannot demonise whole communities or whole groups of people because of the actions of some people."
Mr Javid said in a tweet: "Corbyn wrong to sack Sarah Champion. We need an honest open debate on child sexual exploitation, including racial motivation."
The Equality and Human Rights Commission said it was a "real shame" that Ms Champion had resigned because of "over-sensitivity about language".
Labour's shadow justice minister Yasmin Qureshi refused to be drawn on whether it was right that Ms Champion stepped down.
"I think you need to ask Sarah that question," she told BBC Radio 4's Today programme.
"Of course we should deal with abuse wherever it occurs and we should ask ourselves as to what we can do to ensure these things don't happen."
Ms Champion's article was written after 17 men were convicted of forcing girls in Newcastle to have sex.
The men, who were mostly British-born, were from Iraqi, Bangladeshi, Pakistani, Indian, Iranian and Turkish communities.
In interviews following the convictions, the Labour MP said such crimes involved "predominately Pakistani men" and said a fear of being called racist was hampering the authorities' investigations.
She then wrote the Sun article, which also included the line: "These people are predators and the common denominator is their ethnic heritage."
Among the article's critics was fellow Labour MP Naz Shah, who said it was "irresponsible" and "setting a dangerous precedent".
Following the backlash, Ms Champion sought to distance herself from the article, claiming it had been altered, something denied by the newspaper.
Announcing she was stepping down, Ms Champion said: "I apologise for the offence caused by the extremely poor choice of words in the Sun article on Friday.
"I am concerned that my continued position in the shadow cabinet would distract from the crucial issues around child protection which I have campaigned on my entire political career.
"It is therefore with regret that I tender my resignation as shadow secretary of state for women and equalities."