Famed fashion house Christian Dior SA suspended creative director John Galliano on Friday after he was detained and accused of an anti-Semitic insult _ a bombshell development just days before the catwalks in Paris heat up for fashion week.

The designer vigorously denied wrongdoing and said the suspension was way out of proportion to the cafe dispute, according to his lawyer.

Dior said in a statement it suspended Galliano pending an investigation into an incident in a Paris restaurant on Thursday night.

Paris prosecutors said a couple in the restaurant accused Galliano of making anti-Semitic insults. A police official said Galliano also exchanged slaps with the couple.

The British designer was questioned and released after the incident at the trendy La Perle bar-restaurant in the heart of the Marais district, near Galliano's Paris apartment. The prosecutors and police, who spoke on condition of anonymity because the investigation is ongoing, say Galliano's blood alcohol level was high.

"The House of Dior confirms, with the greatest firmness, its policy of zero tolerance for any anti-Semitic or racist comments," Sidney Toledano, CEO of Dior Couture, said in the statement.

All this is a blow at a crucial moment for one of fashion's most storied companies. Dior would not comment on whether it would present its collection as planned at the fall-winter 2011-2012 ready-to-wear shows that start in Paris next week.

Critics suggested that Dior had been looking for a way to part with the extraordinary yet temperamental Galliano for some time, and the restaurant spat provided a reason for a break-up.

Galliano's flamboyant personality and over-the-top creations have become synonymous with Dior over his 14-year tenure. He revamped and modernized the image of the house and sent out intricate, imaginative collections with themes ranging from ancient Egypt to Masai tribesmen to 18th-century equestrians.

Known for a razor-sharp tongue and a chameleon style, he charms fashion insiders at the end of each runway show with his puffed-out rooster strut, always in an outrageous costume.

Galliano "modernized Dior and made it more youthful than any of his predecessors. At times his clothes have been confounding.... and at times have been so extraordinarily sexy that it made you wonder how the brand continued to dress France's first ladies and high society," said Dana Thomas, author of "Deluxe: how Luxury lost its luster," an expose of the luxury industry.

French first lady Carla Bruni-Sarkozy is a close friend of the designer, and nearly always makes public appearances in Dior.

"These days I see Dior more on young Russian girls in Saint Tropez than on chic women in Paris, but perhaps that is the goal," Thomas told The Associated Press.

Asked whether she thought Galliano would brave the current controversy and be back at Dior, she said, "No."

Jessica Michault, fashion critic for the International Herald Tribune, noted that "the brand is stronger than one designer."

"The house is a very strong image, very iconic, and was even before John got there. He created a very romantic image for the house, something that makes people dream. But he's not the whole history of Dior," she told the AP.

Galliano was "totally surprised" by the suspension, which he considers "totally disproportionate," lawyer Stephane Zerbib told the AP. "He is presumed innocent."

"He never made an anti-Semitic remark in more than 10 years at Dior," the lawyer said. "He was insulted, and he responded to the insults."

Critics noted that Galliano has long had a wild reputation.

"Given Mr. Galliano's history of party antics, this is not a surprise," Thomas said.

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Jenny Barchfield in Paris contributed to this report.