Home Affairs will examine claims a political staffer blamed for writing senator Fraser Anning's infamous "final solution" speech is on unpaid leave from the department.
Staffer Richard Howard is now talking with lawyers after being "offended" by suggestions he supports right-wing extremism.
Mr Howard took leave without pay from a senior position in the Home Affairs department to work for the Queensland senator, AAP understands.
However, a source also told AAP Mr Howard routinely attended Senator Anning's office during parliamentary sittings in Canberra - while he was still employed by Home Affairs and not on leave - to provide political and other advice.
In his maiden speech in August last year, Senator Anning described a national vote on banning Muslim immigration as the "final solution" - a term linked to the Holocaust.
One Nation leader Pauline Hanson told parliament in August she believed Mr Howard was behind the speech.
"The speech was written by Richard Howard, straight from Goebbels' handbook from Nazi Germany," she said at the time.
A spokesman from Mr Anning's office said it was "manifestly false" that Mr Howard wrote the speech and the staffer just supports the policies of the government of the day.
"Mr. Howard utterly rejects and is deeply offended by any suggestion that he has any sympathy for any form of right-wing extremism," the spokesman said.
The statement argues Mr Howard is a "classical Liberal" and former NSW Liberal Party state council member.
"As a result of the escalating vitriol in the media and potential damage to his reputation Mr. Howard is currently seeking legal advice."
However, a source confirmed to AAP that Mr Howard wrote the speech, based on the "similar views he shared" with Senator Anning.
Home Affairs secretary Michael Pezzullo said while he would neither confirm nor deny the reports, it would be negligent of him not to look into the matter.
"We will not tolerate extremists of any description. Any form of extremism is repugnant," Mr Pezzullo told a Senate estimates hearing on Friday.
"Any association with groups that vilify minorities, that either normalise or incentivise violence is completely abhorrent.
"You will not be working in my department if you hold those views."
Mr Pezzullo said he would be limited by parliamentary privilege as to what he could look into if the man was working as a political staffer.
He said natural justice and the rule of law needed to be respected.
It is understood Senator Anning personally wrote to a senior official in the department to formalise Mr Howard's leave from what a source described as a "gazetted" or managerial-level job within Home Affairs.
Former Liberal Democrats senator David Leyonhjelm, who has known Mr Howard for a decade, described him as a "moderate, liberal-minded guy".
