Labor's national conference agreed to amendments that would bolster multiculturalism, as well as racism prevention initiatives.
Among them will be a national strategy for anti-racism, which will run alongside education efforts.
"Labor is very concerned by the rise of racism and of division, including incidents of online racism," the amendment said.
"(Labor) will continue to oppose those who foster extremism, hatred, ethnic division or incitement to violence."
The triennial conference for Labor policy coincides with rising support for right-wing parties such as One Nation, with leader Pauline Hanson calling for a reduction in migration levels.
Labor delegate Paula Masselos, who moved the amendment, said multicultural Australia was under attack by One Nation and the coalition.
"It costs is and it erodes our social cohesion. It makes Australians feel unsafe in different communities," she told the conference.
"Pauline Hanson (talks) down the Australians who choose Australia to be their home. They come here for safety.
"Hanson and Angus Taylor are the ones walking away from that."
A resolution also passed condemning Opposition Leader Angus Taylor and the coalition for "their continued lurch to the right and their abandonment of multicultural communities".
Labor member Hameed Abdul spoke out on the Islamophobia experienced in the community following the rise of One Nation.
"It's a lifelong trauma ... it impacts every aspect of your life," he said.
"Islamophobia is real. It exists in our suburbs, schools, workplaces, public transport, online, and even outside our places of worship."
It comes as Attorney-General Michelle Rowland called for social cohesion measures to be strengthened.
"I look forward to receiving the final recommendations of the royal commission on anti-Semitism and social cohesion later this year, and working across the government to strengthen the bonds of social cohesion," she said.
The royal commission was set up following the Bondi terror attack in December, where two gunmen opened fire on a Hannukah festival, leaving 15 people dead.
