The Conservatives want to scrap rules requiring public bodies such as schools and hospitals to consider promoting equality in their decisions.
In what the party described as the first step in a programme to "restore common sense", Kemi Badenoch said the Public Sector Equality Duty (PSED) has resulted in some groups being "preferred over others".
The Tory leader called for its repeal after warning public bodies have "spent so long worrying about institutional racism that they have become institutionally incompetent".
The Labour government, meanwhile, has promised a new strategy with a primary focus on getting working-class people joining and progressing in the civil service.
Badenoch's speech came after the murder of Henry Nowak and the police's response fuelled questions about equality policies and laws.
The Conservatives are trying to forge a distinct response from both Labour, who have strengthened equality protections, and Reform UK, who want to go further than the Tories and scrap the Equality Act completely. Reform says it would still protect people in the workplace.
The Public Sector Equality Duty, which applies in England, Scotland and Wales, requires public bodies and bodies carrying out public functions to have "due regard" to certain needs.
These include eliminating unlawful discrimination and to "advance equality of opportunity between people who share and people who do not share a relevant protected characteristic".
Protected characteristics include age, disability, race, pregnancy, sex and sexual orientation.
The Tory policy to repeal the PSED has been in development in recent months, with Badenoch saying: "We do not need to replace the duty, we need to explain to people that they should do their jobs."
She also said equality law "properly designed should protect us all in the same way", adding: "It should be a shield, not a sword."
But she said the understanding that such laws should protect people from being treated differently is being "perverted".
Badenoch said "modern Britain is the least racist country on Earth" and pointed to her experience as a child of living on three different continents.
She added: "It is because we are not racist, because we care so much about equality that we have overcorrected and actually brought in rules that are actually discriminatory."
Badenoch said repealing the PSED would be the "best way" to "remove discrimination from the law while still protecting equality under the law".
She acknowledged she did not ask for the PSED to be removed during her time in government serving as an equalities minister.
Badenoch said she "kept trying to explain to people how to make sure they complied with the law in the Equality Act", but her letters were "ignored" and so the best approach now was to remove the PSED.
Government guidance says the duty should "always be applied in a proportionate way" depending on the circumstances of the case and that organisations should avoid an "overly bureaucratic and burdensome approach".
The duty was introduced in 2010 as part of the Equality Act, which merged previous anti-discrimination laws such as the Equal Pay Act and the Disability Discrimination Act.
Since its introduction, organisations and individuals have been able to take public bodies to court for failing to abide by the duty.
In 2011, the High Court ruled that Somerset and Gloucestershire County Councils had not complied with the duty when they sought to withdraw funding for more than 20 libraries.
In 2020, the Equalities and Human Rights Commission concluded that the Home Office had not complied with the duty in relation to how its "hostile environment'" policies would impact members of the Windrush generation.
Ahead of the speech, the Conservatives argued the duty had led to the Bank of England taking Winston Churchill off bank notes and produced police training that advised officers not to treat people the same way.
The Bank of England has previously said a "key driver" of its plan to replace historical figures with animals was "to increase counterfeit resilience, but it also provides an opportunity to celebrate different aspects of the UK".
A spokesman for the Equality and Human Rights Commission said the purpose of the PSED is to "make sure public authorities think about how they promote equality throughout their day-to-day business".
They added the PSED is "not a barrier to these organisations doing the job the public expects them to do" but is there to "help them make good decisions".
Disability Rights, a campaign group, said they "disagree profoundly" with the calls to repeal the PSED as "systemic discrimination remains embedded in our society and institutional policies and services".
Reform UK said Badenoch's suggestion was "classic Conservative politics: too little, too late, and nowhere near enough".
Liberal Democrat Women and Equalities Spokesperson, Marie Goldman MP, said the speech was "a desperate attempt to fan the flames of culture war politics from a Conservative party completely out of ideas".
She said: "Instead of exploiting division, the Conservatives should focus on coming up with ideas to fix an NHS and economy that they left in tatters."
Details of the Labour government's new strategy are expected to be published shortly, but the government said it would place a "major, explicit emphasis on socio-economic background as a primary driver of unequal opportunity".
A government press release said the strategy would aim to address an "over-representation of people from more well-off backgrounds" in the civil service.
It also said it would try to ensure that "people from working class and regional backgrounds do not feel they need to alter their behaviour, accents or language to fit in with the civil service".
