Labor senator Sam Dastyari has warned of a rise in white nationalism after he was ambushed by members of a far-right group who labelled him a "terrorist" and a "monkey".

Key points: Labor senator Sam Dastyari was called a "terrorist" and "monkey" by members of far-right group Patriot Blue

Labor senator Sam Dastyari was called a "terrorist" and "monkey" by members of far-right group Patriot Blue The ambush, which lasted almost four minutes, happened in a university pub in Melbourne

The ambush, which lasted almost four minutes, happened in a university pub in Melbourne The men berated Dastyari over his links to donations from China

Senator Dastyari, who was born in Iran and identifies as a non-practising Muslim, was confronted by members of the nationalist Patriot Blue group at a Melbourne pub last night during an event for his book tour.

A video posted to the group's Facebook page begins with one of the men confronting Senator Dastyari.

"You terrorist, you little monkey," he taunts.

"Look at this terrorist mate, why don't you go back to Iran."

The uncomfortable clip runs for almost four minutes, with the men following Senator Dastyari to his table to continue the harassment.

"Mate, you're a bunch of racists go away," Senator Dastyari responds at one point.

His Labor colleague Tim Watts also weighed in, after the men asked Senator Dastyari to explain "what race" Muslims identify with.

"What race is a dickhead?" Mr Watts replied.

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Warning: Contains strong language

This morning Senator Dastyari labelled the men Islamophobes, describing the behaviour as sickening and warned it was becoming more widespread.

"There is a rise in the extreme right and there is a rise of white nationalism and it needs to be called out," he told ABC Radio Melbourne.

"I'm in public life, there are 15 to 16-year-old kids in the schoolyard copping this kind of racial abuse and they don't have the tools available to handle this."

Senator Dastyari later told a media conference he would consult with his family before taking any legal action.

Sorry, this video has expired Sam Dastyari thankful for support after pub ambush

Dastyari 'playing the victim' says man found guilty over mock beheading

Neil Erikson, one of the men who confronted Senator Dastyari last night, was part of a trio found guilty of inciting serious contempt with a mock beheading in Bendigo in 2015.

He was charged under Victoria's Racial and Religious Tolerance Act after the group filmed the beheading of a mannequin with a toy sword.

At that time he was part of the nationalist group United Patriots Front, but he now says he represents Patriots Blue.

Mr Erikson defended his part in the pub encounter.

"Sam's a strong bloke. He's got a thick skin. He's been in politics for a long time. He gives as good as he gets, he called us rednecks which is a racist term in fact," Mr Erikson told AM.

"He gives as good as he gets. I think he's alright, I think he's playing the victim a little bit."

But Prime Minister Malcolm Turnbull said there should be "zero tolerance" for the behaviour.

"There is no place for racial vilification in Australia," he told Sunrise.

"We are the most successful multicultural society in the world and that is because … our society is built on a foundation of respect.

"We should have zero tolerance for racism and racist abuse like that."

Opposition Leader Bill Shorten told Channel Seven that he spoke to Senator Dastyari shortly after the incident.

"I rang Senator Sam, he was in good spirits, but what is this country coming to when you can't go out and have a meal without being abused by idiots — and by racist idiots?"

One Nation senator Pauline Hanson told Sky News that Senator Dastyari was using being called a "terrorist" to sell his book.

"He's a big boy … and I think he's just using this to get publicity to sell his book and I don't see anything in this, I really don't," she said this morning.

Sorry, this video has expired Author and documentary maker John Safran on rise of the far right

But documentary maker John Safran said Senator Dastyari was purposely filmed by the "menacing" group to create video content for the far right group.

"That's why they've filmed Sam Dastyari. It's not like an incidental filming," he said.

"In the case of those guys I think they do have a distaste to people who aren't them culturally. And I think they don't have empathy and don't understand how this affects people who they're attacking."

Toll says man in shirt doesn't work for them any more

In the video a woman sitting at Senator Dastyari's table interrupts at one point to ask if the men, one of whom is wearing a Toll Group work shirt, are employed by transport company Toll Group.

A Toll spokesperson has now confirmed that despite the work outfit, "the individual...is not employed by Toll, and has not worked for us for several months".

"The actions of these individuals in no way reflect our beliefs and values as a company," the spokesperson said.

"No member of the community should have to endure the behaviour displayed overnight and we do not tolerate such behaviour at our company."

In May Neil Erikson recorded a video saying he lost his job at Toll Holdings after facing court action over his far-right activities.

'Two guys just barged in and got right in his face'

The Patriot Blue clip has received fewer than 200 likes, but received a big reaction online.

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Senator Dastyari also took to Twitter to respond to the event.

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Event organiser Sherryl Clark told the ABC they were horrified by the men's threatening behaviour.

"It was one of our writers in conversation events which are always friendly and fun," she said.

"Sam was there to talk about his book.

"The two guys just barged in and got right in his face. He was amazingly patient and didn't react.

"It was before the event started thank goodness so not many people there."

"I'm big enough and bad enough to look after myself," Senator Dastyari said this morning.

"But the hate, the abuse that gets thrown … and I have to say, one of the lessons I've learnt from my time in university bars is that you have to have a very, very good wingman and Tim Watts MP is the wingman of all wingmen."

The original video has now been removed by Facebook.