Aboriginal and ethnic groups yesterday warned that Ms Pauline Hanson's One Nation Party, which recorded massive swings in the Queensland election, stood to set back race relations for decades.
Economists predicted that the party, which supports a return to trade protectionism, could damage the economy and drive away foreign investors.
The swing to the fledgling party, which captured more than 22 per cent of the state's primary vote, could have implications for the timing of the next federal election and a raft of federal government policies.
But the Australian Prime Minister, Mr John Howard, said while it would be foolish to ignore One Nation's gains, he would not be changing course on key tax reform and native land title legislation opposed by Ms Hanson.
Many in the country were shocked that the 14-month-old party - which boasts Ms Hanson as its sole federal MP in Canberra and could now be in line for a possible 10 seats in the Brisbane-based Queensland parliament - could become the third force in Australian politics.
The reaction to the Queensland poll, victory in which is still too close to call between the major Coalition and Labor parties, was widespread because of One Nation's perceived racist and anti-immigration policies.
Mr Les Malezer, of the Foundation for Aboriginal and Islander Research Action (FAIRA), said the result was a disaster which would throw reconciliation between blacks and whites out of the window.
"The most disappointing thing is that the public have shown they're prepared to vote for a party which has at its core agenda attacks on Aboriginal and Asian people on the basis of race," he said.