Malcolm Turnbull says the federal government is considering a "values" test for people seeking permanent residency in Australia.
However, he talked down suggestions from Citizenship Minister Alan Tudge that Australia is veering towards a "separatist multicultural model".
Mr Turnbull said the values test was "one of the issues" the government was considering.
"But I have to say to you we are the most successful multicultural society in the world," he said in northern Tasmania.
"This is a country where 28 per cent of Australians were born outside Australia, over half have a parent born outside Australia, but isn't it remarkable that we live together in so much harmony because of the values we share?"
Mr Tudge told the Australia/UK Leadership Forum in London it was time to pull the nation back to be "firmly on the Australian integrated path".
Australia and the UK were facing similar challenges to social cohesion and liberal values, including ethnic segregation, the minister said.
Mr Tudge said a proposed English language skills test for those seeking permanent residency should be extended to include a values assessment.
The current system requiring people to sign a values statement before coming to Australia wasn't enough because their pledge couldn't be assessed, he said.
Labor frontbencher Anthony Albanese criticised Mr Tudge's speech, saying ministers should promote Australia while overseas.
"It's pretty odd that an Australian government minister goes to the UK and talks our country down," Mr Albanese told the Nine Network on Friday.
Cabinet minister Mathias Cormann, who migrated to Australia from Belgium, said migrants had made a magnificent contribution to the county.
"We've got to make sure we keep thinking about how we can best structure our immigration program to ensure we attract the right people with the right skills, the right attitude and indeed a commitment to our shared values," Senator Cormann told Sky News.
Race Discrimination Commissioner Tim Soutphommasane said there was no compelling evidence of ethnic separatism in Australia.
He said values shouldn't be equated with lifestyle or ethnicity.
"Anyone who comes here in a settles here and contributes to our society should not be expected to adhere to a particular lifestyle defined for example by the beach, sport and barbecues," Dr Soutphommasane said.
