The University of New South Wales says Captain James Cook 'invaded' Australia in 1788, rejecting the term 'settled,' which has commonly been used.
Academics and experts have rejected suggestions a University of NSW language 'tool kit' for its students is political correctness gone mad.
Debate has exploded over the four-year-old set of guidelines, which refer to the 'invasion', not the settlement, of Australia, after a Sydney newspaper ran an outraged front page slamming the guide as a 'whitewashing' and rewriting of Australia's history.
The guidelines, in the university's Diversity Toolkit, says 'Australia was not settled peacefully, it was invaded, occupied and colonised'.
"What the guide which has provoked attention is saying is that some ways of talking about it are appropriate and some are less appropriate," UNSW Dean David Dixon told SBS.
The current toolkit, which was produced in 2012, goes on to say that describing the arrival of the Europeans as a "settlement" attempts to view Australian history from the "shores of England" rather than the shores of Australia.
UNSW media officer Denise Knight said the terminology guide was designed as a resource to assist staff and students in describing Indigenous Australians, their history and culture, but should be treated as a guide only.
"The guide is not required reading for all students across the University – teachers can choose to include it as a resource for their class," Ms Knight said.
"We always encourage students to form their own opinions so to suggest that such a guide would stifle open debate in any way is plainly wrong," she said.
"The guide does not mandate what language can be used. Rather, it uses a more appropriate/less appropriate format, providing a range of examples. This is an important distinction to make."
However conservative commentators such as radio host Alan Jones have slammed the guidelines.
"I think this is exactly what John Howard was talking about when he talked about the black armband view of history," Mr Jones said.
Historian Keith Windshuttle told SBS he believed conservative views of history were being silenced.
"My view is that Aborigines ceded the country to the white people and they did this because they wanted what the white people had," he said.
But other commentators, including the University of Melbourne's Associate Professor Sarah Maddison, say this view denies the facts of Australia's history.
"It was invaded and colonised it was not peacefully settled," she told SBS.
"It's plainly a nonsense to suggest Captain Cook discovered Australia.
"He wasn't even the first white person here. There were at least a dozen Dutch explorers here before Captain Cook arrived."
Ms Knight said terminology guides like the toolkit were commonplace across universities and many public sector organisations.
"For example, the guide suggests referring to Captain Cook as the first Englishman to map the continent’s East Coast is 'more appropriate' than referring to his 'discovery' of Australia," she said.
"It says 'most Aboriginal people find the use of the word discovery offensive'."
Media student and Aboriginal woman Rebekah Hatfield told SBS saying Australia was settled "kind of denies our existence in a sense".
"Some aspects of Australian history are not pleasant or happy," she said.
"But to say that this course is actually rewriting history is insulting me as an Indigenous person."