Whites at the top of the valley, Asians at the bottom. Is Nelson another town ready to blow?

During the school run at St Paul's Church of England primary in Nelson, east Lancashire, some intelligent, white, middle-class mothers were discussing how an Asian woman had arrived at a recent school fund-raiser in national dress.

The woman, mother to one of only five Asians at the school, turned a few heads, said Helen Hodkinson, who had just installed her four-year-old son, Alex, at his desk. "I was looking at a few of the faces and I couldn't quite tell if they were laughing. She might have been better blending in with something less garish."

Mrs Hodkinson has found few Asians as unpalatable as those aggressive whites who occasionally roll in at the surgery where she works, but she says the Asians do tend to "just turn up at school events and not play a part". They might "contribute a bit more".

She and her friend Margaret Parker, mother of four-year-old Nicholas, are already troubled about which secondary to send their toddlers to because it cannot be Edge End, 500 yards away. A 50 per cent Asian contingent grew to 70 per cent during the time there of Mrs Parker's oldest son. "There were lots of Asian gangs and they stayed together and resented white children coming through," Mrs Parker said.

And so it seems that young Alex and Nicholas are destined to spend their adolescent years at schools in Accrington, rather than grow up with any of the Asian population of Nelson – their home at the heart of the segregated, racially fragile land of north-west England's former cotton towns, which have taken Britain by such surprise in the past two months. Little wonder that Nelson's mosque had been preparing all week for race attacks during yesterday's prayers. The town borders on Burnley, where 200 Asians rioted last weekend and where police were yesterday given special powers by the Home Secretary to prevent processions and assemblies, in response to a plea from Lancashire's Chief Constable to "ensure community safety".

It is five miles from Accrington, which awoke yesterday to news of five overnight petrol bomb attacks – one racially motivated – on a car, a Roman Catholic school and a DIY store. Since midweek, the Pendle valley on which Nelson is built offers an easy metaphor for its racial separations: the Asians are at the bottom and whites at the top, divided by the Lomesher Road.

A survey of 750 Asian households in the district for a recent Salford University study demonstrated equally pronounced socio-economic divides. The results are predictable now, but they were apparently unobserved before Oldham's riots six weeks ago: no one in full-time work in half of Asian households; £9,000 average income in more than 200 households; 50 per cent Asian male unemployment. Nelson is an "inner city" in its deprivation, the university said.

As in Oldham and Burnley, Nelson's Pakistanis and Bangladeshis pass up social housing and instead huddle together in hopelessly poor Victorian terraces which have been changing hands for £5,500, and provide both back-to-back security and the space the large families need to stay together.

The Commission for Racial Equality (CRE) believes this level of deprivation alone – and not racism – is enough to cause a place like Nelson to "blow". Chris Myant of the CRE said: "These are not race riots but public order riots. They are not rioting because they are Pakistanis and Bangladeshis but because of social circumstances."

As in Oldham and Burnley, the evidence of Nelson's emboldened second and third- generation Asian youth disproves this theory. Their segregation provides a powerful bond, which they will only tend to use in large-scale public disorder to resist a perceived outside (probably right-wing) threat. "The racists are now only a few miles away [at Burnley] and if anyone comes here we will give what we have to. Our parents do not have our pride," said Amjad, one of a gang of 18-year-olds gathered at the Admiral shopping centre.

The National Front has gained votes in these sorts of places by concentrating on delicate, often non-existent, racial fault lines: proposing to Oldham voters that Asian rubbish was better collected and to Burnley voters that Asian council houses had received more new front doors.

The smaller, parochial cotton towns – such as Halifax, which has an acute heroin addiction problem among Asians, Ashton-under-Lyne, where the National Front collected 4.5 per cent of the vote in the general election, and Rochdale – are open to this exploitation because they do not have the infrastructure gathered by nearby Bradford as it fought off the British National Party's threat in the 1970s, say some analysts.

"Bradford did meet these issues early on and allied itself to the anti-fascist movement," said Dr Colin Webster, a criminologist at the University of Teesside who has studied Asians in West Yorkshire. (Significantly, during the summer's disturbances, Bradford Asians have travelled to Lancashire in support, rather than riot themselves.) Blackburn, 10 miles from Burnley, has had the same experience. In the 1970s, it voted in two extreme right-wing councillors and, though its large Lancashire police division recorded nearly 200 more racist incidents than in any other town in the county in the 12 months to March this year, tensions are less acute and Asian wealth more commonplace.

Blackburn's controlling Labour group has also been more polished on issues of racial inclusion than in both Burnley – where several defecting Labour councillors have been articulating the white community's fears of Asians this week – and Oldham, where one meeting to elect a prospective Labour councillor ended up in a fight between a Pakistani and a Bengali.

At the Edge End secondary school in Nelson, the headteacher, Paul Burgess, is involved in a fight of his own – to make a once 88 per cent Asian school multicultural again. When 30 white children were removed from the school and replaced with Asians during an educational reorganisation in 1988, Asian pupils became the majority overnight and that prompted a white exodus. Within five years, so many white parents had removed their children that the school had become 88 per cent Asian. Mr Burgess has pulled the ratio back to 69 to 31, partly through teaching success that has taken the school into Ofsted's top 100, and partly because the neighbouring "white" school has been failing.

"It's a long haul. It's going to take generations to overcome the white suspicions and I do get depressed sometimes," Mr Burgess said. "People I know and value still sometimes say to me, 'How on earth can you teach at a Paki school?'"