Charles Sturt University students pose as Klu Klux Klan members and a slave in a picture posted on Instagram.

A post-exam celebration at a New South Wales pub has stirred controversy after photos circulated online showing people dressed wearing Ku Klux Klan outfits, a Nazi uniform and blackface costume.

The party in Wagga Wagga on Thursday night was billed as a celebration for Charles Sturt University students following the end of the exam period.

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The costume theme for the party was advertised as "politically incorrect".

The Facebook event encouraged people to "grab a kit that would legally get you in s... and hook right in".

On Thursday night, a photo of six people dressed in offensive costumes was posted to Instagram.

The caption was titled: "Very very politically incorrect. Cotton prices are unreal though so it's a great time to be pickin'."

A second photo showed three students dressed as imprisoned Jews in blue and white-striped suits with another student dressed as a Nazi with a swastika on his arm standing behind them.

That photo was also posted to Instagram with the caption: "Jesus Christ, I Jews you as my lord and saviour #csulater #hazingisfun"

Charles Sturt University said it is currently investigating the incident.

"Charles Sturt University (CSU) will not tolerate this offensive behaviour. It does not reflect our university values and we strongly condemn these actions," CSU vice-chancellor Andrew Vann said in a statement.

"CSU is currently investigating these incidents and social media posts."

A university spokesman could not confirm whether current students were pictured in the photo.

The pub, Black Swan Hotel, posted a statement on its Facebook page on Thursday night.

"We were unaware of this behaviour happening out the back of the pub, however we have immediately dealt with this," the statement, which was subsequently deleted, said.

"We have zero tolerance and do not condone this sort of behaviour."

But the hotel has come under fire on social media following the event.

Multiple Facebook users have left negative, one-star reviews along with critical comments on the hotel's Facebook page.

Hotel staff declined to comment when contacted by the media.