``Our past is deeply etched with racism,'' said Zita Antonios yesterday, citing the dispossession and forced assimilation of Aborigines and the former `white Australia' immigration policy as examples.

``But Australians also have a deep belief in social justice and, with a few virulent exceptions, reject overt racism,'' she told the Foreign Correspondents' Association.

Australians' general sense of fair play was being distorted into prejudice against Aborigines and immigrants for receiving special treatment from governments to address disadvantage or special circumstances, Antonios said.

Speaking on the same day Parliament passed Prime Minister John Howard's law restricting Aborigines' land rights, Antonios said Aborigines are being attacked as privileged when analysisshows they are the most dispossessed and chronically disadvantaged people in Australia.

Ethnic minorities are being stigmatized as a threat to national unity because of their desire to maintain cultural identity, she said.

Independent Federal Legislator Pauline Hanson's One Nation party claims Australia is becoming `Asianised.' She says immigrants should be given an English-language test and that special welfare benefits to Aborigines should be abolished.

One Nation attracted more than 20 per cent of the vote in a June 13 Queensland State election, and has been polling in the mid-teens nationally.

The party's success in Queensland was widely reported around the world and critically received in Asia.

The government has warned One Nation could damage Australia's crucial trade with the region.

Antonios said the unprecedented economic and social upheaval of modern times heightened feelings of anxiety and insecurity in Australia and had ``broken the threshold of tolerance.'' Hostility towardaborigines and immigrants was the result.

``Asian Australians are telling us loudly that it is not comfortable being an Asian in Australia right now,'' Antonios said.

She said the rise of a new right wing in Australia reflected similar events in many countries including the United States, and made Australia one of many nations that are ``grappling to maintain or define their sense of identity, security and sovereignty while achieving substantive social justice.''

``Australia has a strong tradition of social justice which can provide a common source of inspiration across political division. We also have a history of racism,'' Antonios said.

``Whether Australia is a racist nation lies with the people of this country and the answer still lies in the balance.''