The best way would be for you to tell your father — respectfully but clearly — that you disagree with his views, and you hope he won’t express them around your children. Ideally, he’ll be sensitive to your concern and keep his views to himself — and even change them.
If he persists, however, you need to tell him frankly that he risks losing his grandchildren’s respect — and you don’t want that to happen. If he still doesn’t change, your only course is to take your children aside and let them know that while you love your father, on this point you disagree with him, and you hope they’ll overlook his prejudice against people of other races. Unfortunately, they’ll probably encounter racial prejudice elsewhere, and it’s best to prepare them for this.
Why is racial prejudice wrong? There are many reasons — but the most important is because it’s a sin in the eyes of God. God made the whole human race, and every person on earth is equally precious to Him. The Bible says, “From one man he made every nation of men…. God did this so that men would seek him” (Acts 17:26-27). Furthermore, Christ died for people of every race, and some day we’ll be together in heaven.
Yes, God loves men and women of all races — and He loves you and your children also. Have you responded to His love by giving your life to Jesus Christ? If not, do so today.