A quarter of Australians describe their personal attitude towards Muslims as negative or very negative, according to a detailed national survey on social cohesion and immigration.
People who are most likely to be highly intolerant towards Muslims include those who are over 65, educated to year 11, work in trades and intended to vote Liberal/National or independent.
Those who feel least negative are likely to be young (between 18 and 44), intend to vote Greens, hold a higher degree and live in Victoria, the survey found.
The Scanlon Foundation's annual snapshot of social attitudes, produced with Monash University and the Australian Multicultural Foundation, finds Australia remains a highly cohesive society.
Social cohesion is seen as a continuous process of achieving social harmony, and includes shared values and common aspirations.
Like other polling in the past 30 years, the survey and a short follow-up poll found the vast majority of Australians had a high level of identification with their country and almost unanimously expressed a sense of belonging and pride.
About 85 per cent of people surveyed agreed with the statement "multiculturalism has been good for Australia".
But an increasing number of people (10 per cent) said they were concerned about racism. One in five said they had experienced discrimination.
One of the most significant changes was the decline of asylum issues in the national consciousness, said report author Professor Andrew Markus, from Monash University.
Last year about 10 per cent of people nominated it as their top concern, whereas this year it had fallen to just 4 per cent.
Australians draw a sharp distinction between refugees assessed overseas and those arriving by boat, the survey said.
In the context of rising unemployment, Professor Markus had also expected increased concern around Australia's immigration intake.
But in this year's survey, only 35 per cent of people said the immigration intake was too high, the lowest proportion since the surveys began in 2007. About 60 per cent said it is "about right" or "too low".
"We don't fully realise how unusual Australia is – aside from Canada there's not many other countries that are so open to immigration," Professor Markus said.
One possible explanation for the low level of concern with immigration is the effectiveness of the government's measures to stop arrival of asylum seekers by boat, he said.
"Perhaps people feel the government is in control of this space, they've stopped boat arrivals."
The survey found a very small proportion of people – about 5 per cent – are negative towards Christian and Buddhist faiths, but about 25 per cent feel negatively towards Muslims.
Strathmore resident Houda Merhi came to Australia from Lebanon when she was five, and said the only time she had experienced discrimination as a Muslim was following the attacks on New York's twin towers in 2001.
In recent months, the small business owner and artist has become a volunteer guide at the newly opened Islamic Museum of Australia in Thornbury.
Many of the neighbours opposed the museum at the planning stage but have since visited and apologised for their position, Ms Merhi said. "When they actually meet Muslims and understand Islam better, that fear just melts away."
The national survey was completed by 1500 people on the phone and 1000 people online.