The study, led by University of Sydney social science professor Kevin Dunn, found one-in-five had experienced racial abuse while one-in-10 had been excluded from activities on the basis of race.

The Challenging Racism Project, collating surveys and studies over the past 11 years, provides a timely snapshot of Australian race relations, which are again under a cloud after a series of attacks on Indian students.

Racial prejudice was identified as a problem by 85 percent of respondents, yet 87 percent believed cultural diversity was positive for Australia.

Dunn said the apparent contradiction reflected Australians' mixed feelings towards multiculturalism.

"Australians (are) pro-cultural diversity, yet anxious of the dangers inherent to cultural diversity if it is not well managed," he said.

About 12 percent of respondents identified themselves as racist, compared to about a third in a similar study in the European Union carried out in 2004.

Dunn said he conceived the project in 1996, when right-wing politician Pauline Hanson was enjoying a surge of popularity with her attacks on Asian immigration and Aboriginal welfare.

Since then, Australia's major racial flashpoint was the Cronulla riots in December 2005, when mobs of whites attacked Lebanese Australians at a southern Sydney beach, sparking a series of retaliations.

Most recently, Indian students have been subject to violent attacks in Australia's major cities, causing outrage on the subcontinent and diplomatic tensions with New Delhi.

Dunn criticized politicians for denying there was any racial element to the Indian attacks, saying their stance hindered efforts to address the problem.

"Clearly there is a need for the realities of racism to be acknowledged, this is essential for enabling public policy responses to racism," he said.

Muslims were the minority most often cited as a concern by Australians, followed by Aborigines, Asians, black Africans and Jews.

Almost one-in-four victims of racism said they were "more bitter and cynical" as a result of their experience.