A major survey of 10,000 Australian-born and immigrant Australians has found most of those surveyed find Australia a good place to live and have a strong sense of belonging.
But the report into social cohesion suggests high levels of discrimination against African and Muslim communities.
Over half of Muslim Australian respondents born in Australia reported relatively high levels of discrimination over the past 12 months.
Australian Federation of Islamic Councils president Keysar Trad says he is not surprised by the findings and he hopes policymakers will take the survey seriously.
"Unfortunately, I'm not surprised by the findings. I am very saddened by them, but I'm not surprised by them. We're seeing rising levels of discrimination against Muslims in a number of fields, and I really hope that this report will be an eye-opener."
The report, entitled "Australians Today," found a significantly higher proportion of Muslim women reporting discrimination -- about 50 per cent higher than Muslim men.
Mr Trad says he does not think women are being specifically targeted, but he says Muslim women's religion is often more visible.
"Muslim women are visible as Muslims through the way they dress. They may not all dress with a scarf, but those who do are clearly identifiable as Muslim."
Other groups also report facing particular discrimination.
In the report, 23 per cent of South Sudanese surveyed said they were unemployed, and 77 per cent -- the highest of any group surveyed -- said they had experienced discrimination.
South Sudan Peace Initiative founder Nyok Gor says he hopes the survey's findings will be used to shape anti-discrimination policies.
And he says he hopes they will also be used to target initiatives around getting young members of the South Sudanese community into work.
"It's very helpful data, it's very helpful information, that should inform the institutions that are there, the government, to be able to look into how to help the majority of young people that are looking for employment. And this is one of the ways to minimise the other issues."
Trust in police is one of those issues the report highlights.
Only 26 per cent of South Sudanese surveyed felt trust in the police.
Mr Gor says, while South Sudanese immigrants to Australia bring an often negative view of police with them, more should be done to aid communication between police and migrants.
"Still the community is feeling that there has been less effort or relationship between community and police, that are always the first to be involved if, for instance, an incident has occurred. How the investigation has happened and the level of information that police have that are either not communicated to the community ... and so it tends to leave quite a big gap. And this is continuing to play a part in how a percentage would be not to trust police."
Assistant Multicultural Affairs Minister Zed Seselja has told the ABC the report should be used to improve the experience of migrants coming to Australia.
"No, I don't think it shows that we're a racist nation. But, unfortunately, like all nations, we have some racist elements within us. And that's distressing when we see it. I certainly condemn it, and, for those who do experience that, I think it is a very distressing thing and we need to speak out against that. What I will do is really engage with the South Sudanese community and get an understanding of some of what they're experiencing and how we can improve that experience in Australia."
Federation of Ethnic Communities' Councils of Australia acting chairwoman Eugenia Grammatikakis says, while the report is mostly positive, it is clear there are areas for improvement.
"Whilst there is a significant support within the community about multiculturalism and continuing migration to this country, there is still work to be done there, collectively and those individual community groups, to ensure that all members of our community -- new migrants, established migrants, those of refugee background -- feel that they are part of the community and that they feel a sense of belonging."
