Islamist group Hizb ut-Tahrir says it doesn't preach hate or spread discord and has accused the Abbott government of playing to right-wing racist opinion.
In a long statement, the organisation - singled out for possible action in Prime Minister Tony Abbott's national security statement - says Mr Abbott has painted the Australian establishment as good-natured, tolerant, decent and accepting.
The children of asylum seekers drowned out at sea or incarcerated in prisons like criminals would beg to differ, spokesman Uthman Badar says in the statement.
He says the national security statement continues the disingenuous approach of western states of seeking to alter "the victim-aggressor paradigm".
Mr Badar says the emphasis on revoking citizenship, restricting immigration and denying welfare is window-dressing right-wing racism.
"Hizb ut-Tahrir rejects the charge of preaching hate or spreading discord and division.
"It is those in the political establishment and media who constantly demonise Islam and Muslims and partake in a cheap politics of fear that spread discord and division."
Hizb ut-Tahrir (Arabic for Party of Liberation) is an international Muslim organisation founded in 1953 with about 300 adherents in Australia. It advocates a single Islamic state, or caliphate, in the Middle East under Islamic law.
The group is banned in many Middle East countries and also in Russia, Turkey, Pakistan and Germany but not in Australia, the US or UK.
Mr Badar said it was the Abbott Government which excused and justified terrorism not Hizb u-Tahrir.
"It excuses and justifies the primitive savagery inflicted on entire populations in Iraq and Afghanistan by its allies," he said.
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