Crossbench senator David Leyonhjelm has labelled a high-profile racial discrimination case against a group of Queensland university students "an attempt at legal blackmail".

The Liberal Democrats senator said the lawsuit - sparked by a Facebook comment posted when students were kicked out of an indigenous-only computer lab - was being used to constrain free speech.

QUT has been criticised for its handling of the case. Credit:Glenn Hunt

Senator Leyonhjelm said it also demonstrated why the Racial Discrimination Act's controversial section 18C needed to be repealed.

Cindy Prior, an indigenous woman and administration officer at QUT, is suing the university and three students under 18C for almost $250,000 in lost wages and general damages, plus future economic losses.