Army chief Lieutenant General David Morrison says the army plans to track down and take action against any serving soldiers who posted offensive comments on a Facebook page.
In a clear warning to members of the Facebook group "RAR Buddies", Lieutenant General Morrison said a large amount of information from the site had identified individual names and comments on a range of issues.
He said the majority of the comments were highly offensive and contrary to army values and those of the wider community.
"I have directed action to identify if serving members of the regular or reserve army have participated in this site and, where inappropriate comments have been made, I intend to take action against those members," he said on Thursday.
The latest row about offensive conduct involving defence personnel surfaced on Wednesday on the ABC 730 Report program, which revealed that the "RAR Buddies" Facebook page contained a range of racist and sexist comments and images.
Comments included: "This is a raghead free zone" and "All women are filthy lying whores".
Below a picture of a drunken women someone has written: "She looks a little 'used' to me."
Another member then replies: "Which woman isn't." More than 1000 former and serving soldiers of the Royal Australian Regiment (RAR) belong to the group.
In the wake of the Australian Defence Force Academy "Skype scandal" last year, Defence Minister Stephen Smith launched a series of reviews of defence culture, one specifically considering use of social media.
The findings are expected to be released soon.
Mr Smith said social media had created new challenges for the Australian Defence Force.
He said he, defence department secretary Duncan Lewis and defence force chief General David Hurley all had zero tolerance for inappropriate behaviour, including inappropriate use of social media.
"All members of defence must meet modern-day community standards and expectations," he said.
The Royal Australian Regiment, formed in the army reorganisation after World War II, is the parent unit of the army's seven infantry battalions. Australia Defence Association executive director Neil James said those doing this were idiots.
"In a war fought with an Islamist enemy they are actually giving propaganda to that enemy. The problem is how you stop it," he said.
"People are looking at this as if this is a problem in the defence force. It's not. It's a problem in society that is manifesting itself in the defence force."
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