Draft laws to be debated next week when parliament returns early would introduce hate speech and racial vilification offences, with a defence included for people quoting directly from a religious text.
When asked to justify the defence of religious text in the bill, Prime Minister Anthony Albanese said the laws would "set a principle-based test for conduct and speech that incites racial hatred towards another person or group".
"We want to get the broadest possible support for this bill," he said on Tuesday.
"I encourage you to read the Old Testament and see what's (in) there, and see if you outlaw that what would occur. So we need to be careful."
Executive Council of Australian Jewry co-chief executive Peter Wertheim told a parliamentary review into the draft bill the remark was ill-advised and reflected a "very unfortunate trope".
"Every faith community can point to religious texts which have been used or could be used and construed to promote hatred on the basis of race," he said on Wednesday.
"And yet every single one of those world religions ... will tell you that that is a misreading of those texts.
"Religion should not be an excuse ... racial hatred, in our own time, is abhorrent and should not be intentionally promoted under any circumstances."
The remark illustrated ignorance in the wider community "about what Jewish people are and what anti-Semitism is".
"I'm not for a minute suggesting the prime minister would have done that intentionally," he added.
Mr Wertheim "totally opposed" the inclusion of the exemption, describing it as a very wide loophole that would render the legislation ineffective.
The bid to strengthen hate speech laws is in response to an Islamic State-inspired attack which killed 15 people at a Jewish Hanukkah celebration at Bondi Beach on December 14.
Liberal sources said members of the party room were shaping up to oppose the legislation on freedom of speech and religion grounds, with a number of conservatives going public with their criticisms of the bill.
Senior Nationals including leader David Littleproud and Senate leader Bridget McKenzie have also slammed the bill's proposed firearm restrictions.
Senator McKenzie is concerned the legislation is being rushed and accused Mr Albanese of attempting to "lump" lawful gun owners with alleged Islamic terrorism.
The laws would create a national buyback scheme, the cost of which will be split with the states, ban the import of certain high-powered weapons and ammunition and strengthen background checks.
Liberal backbenchers will likely meet in coming days to discuss whether to support the legislation, while shadow cabinet convenes to officially determine the party's position.
One Nation leader Pauline Hanson said her party would oppose the bill, saying law-abiding gun owners would not be a scapegoat for the government's "failure to check rising anti-Semitism".
The Greens would become the powerbrokers in the Senate if the opposition doesn't support the bill and they are yet to come to a final position.
While supporting gun reform, the party is pushing to expand hate speech protections to other minorities, including on the basis of sexuality and disability.
The Jewish Council of Australia has urged the government to continue with consultation and says rushing the bill "is not going to make Jews safer".
"It should slow down and commit to an evidence-based, whole-of-society approach," Max Kaiser, the council's executive officer, said.
Despite its "shortcomings", Mr Wertheim said he would rather see the legislation passed in its current form than not.
He wants hate crime provisions expanded to protect individuals over other attributes, including sexual orientation, gender, age and disability.
The parliamentary inquiry also heard from Cattle Australia, Equality Australia and the Australian Human Rights Commission.
A report is due by Friday before parliament returns to debate the reforms.
Lifeline 13 11 14
beyondblue 1300 22 4636
21°C