Fraser Anning said Australians should be allowed to decide whether "non-English speaking immigrants from the third world" and people of Muslim faith, are welcome.
"The final solution to the immigration problem, of course, is a popular vote", Anning said, invoking the infamous term used by leaders of Nazi Germany to refer to the Holocaust.
His choice of the phrase "final solution" - used by Nazi high command during the Holocaust as a euphemism for the mass extermination of Jews - provoked instant and widespread condemnation, reports The Sydney Morning Herald.
Australian Senator Fraser Anning on Wednesday compared Muslims with "poisonous jelly beans", following his "racist" maiden speech in the Senate seeking immigration restrictions based on race. We have in this chamber representatives of Australians whose families have been here for generations, who are the descendants of migrants to Australia of more than 100 years ago.
Anning is a former member of One Nation and won his seat in Parliament after the removal of One Nation Sen.
It pisses me off deeply that people like Anning can say whatever they want but will never have their very identity questioned.
Crossbench senator Derryn Hinch was sitting in the Upper House listening to the speech and said it was excruciating.
Anning's attack on non-white Australians and Muslims is really out of this world stuff. "That is an unacceptable use of the term", he told ABC Radio on Tuesday.
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In a powerful stance on Wednesday, Shorten and Turnbull shook hands across the table, as they agreed that it was important to call out racism.
She said: "We have called for people coming here to give their undivided loyalty to this country - that you be Australian and proud of this country and abide by the laws".
Home Affairs Minister Peter Dutton told Parliament he strongly supported the motion moved by Labor to condemn racism.
Faruqi told Guardian that Australia Anning's speech had thrown millions of decent Australians under the bus in a "desperate attempt to remain relevant and reignite a long gone racist policy".
He effectively called for a return to the White Australia policy, where most migrants would be from a European Christian background.
"I don't regret anything, I am not going to apologize or regret anything that I say", he said.
The outrage over Anning's comments follows fury earlier this month after broadcaster Sky News aired an interview with far-right agitator Blair Cottrell, who once called for a portrait of Adolf Hitler to be hung "in every (Australian) classroom and every school". She said Howard had asked him for a job but she refused to take him on. "He wouldn't know what any of this means, nor I think would he be spending time finding out".
The Prime Minister rejected Mr Anning's repeated references to Islamic terrorism as a reason to end Muslim migration.