Labor senator Sam Dastyari has been abused in a Melbourne pub by men calling him a "terrorist" and telling him to return to Iran.
"You terrorist, you little monkey," one of the men shouted at Senator Dastyari during the incident, which was filmed and later posted on the Facebook page of far-right group Patriot Blue.
Labelling the behaviour "disgusting", Senator Dastyari said he was considering further legal action against the men.
During the exchange on Wednesday night, the men surrounded Senator Dastyari and his companions, filming him with a mobile phone. One challenged him: "Why don't you go back to Iran, you terrorist," targeting the NSW Labor figure's heritage.
Senator Dastyari then labelled the men racists and told them they were embarrassing themselves, to which they replied: "What race is Islam? We are the real Australians. Look at this terrorist".
Accompanying the NSW senator was Victorian Labor MP Tim Watts, who asked the men: "What race is dickhead?"
One of the participants was Melbourne man Neil Erikson, convicted earlier this year under Victoria's new racial and religious tolerance legislation.
Mr Erikson and two other members of the United Patriots Front, another far-right fringe group, staged a mock beheading of a dummy outside the Bendigo council offices, to protest against plans to build a mosque in the regional Victorian city.
They were all found guilty by a magistrate of inciting contempt, revulsion or ridicule of Muslims in September, making them the first people convicted under Victoria's Racial and Religious Tolerance Act.
Patriot Blue members also stormed a Moreland Council meeting last month, carrying a fake coffin painted with the Australian flag and calling councillors traitors, after the council voted to no longer celebrate Australia Day.
Mr Erikson was later interviewed on radio station 3AW and labelled Senator Dastyari a "sook".
"What is racist about what we said?" he said.
"He called me a redneck and that's a racist slur ... so I turn around and call him a terrorist. I think it's fair."
Mr Erikson was wearing a work shirt bearing the logos of Toll Group during the incident.
Toll issued a statement that said: "We are currently investigating the matter and whether any of the individuals involved are currently employed by Toll. The actions of these individuals in no way reflect our beliefs and values as a company. At Toll, we celebrate our diverse workforce and we expect all of our people to behave in a manner that is consistent with our values and stated policies at all times."
On Thursday morning, Senator Dastyari said white nationalist behaviour was designed to make victims feel small and linked it to the resurgence of hard-right politics.
"All of this is the rise of the radical right in this country, it is the rise of One Nation right. These are people who feel incredibly empowered because of what Pauline Hanson has done for them."
The One Nation leader refused to condemn the abuse and her high-profile chief-of-staff James Ashby told AAP: "Sam Dastyari gets heckled because he's a wanker ... and not because he's a Muslim."
Senator Hanson said: "I think he's just using this to get publicity to sell his book and I don't see anything in this, I really don't."
She labelled Senator Dastyari a "smart arse".
"It's got nothing to do about him being a Muslim and he's admitted he's a non-practicing Muslim."
Prime Minister Malcolm Turnbull condemned the incident, saying there should be "zero tolerance".
"There is no place for racial vilification in Australia," Mr Turnbull told Channel Seven.
Opposition Leader Bill Shorten said he was "disgusted by the idiots".
"What is this country coming to, when you can't go out and have a meal without being abused by idiots, and by racist idiots?"
- with Anthony Colangelo