Victoria's Education Minister says high school students are receiving sub-standard education about the Holocaust, as the Government makes learning about the atrocities of World War II compulsory for years 9 and 10 students.

Key points: James Merlino says Holocaust education can help combat rising anti-Semitism

James Merlino says Holocaust education can help combat rising anti-Semitism The Government will work with the Victorian Jewish community to develop new teaching resources

The Government will work with the Victorian Jewish community to develop new teaching resources A parliamentary inquiry into Victoria's anti-vilification laws could see Nazi memorabilia and flags banned

James Merlino said all government secondary schools would be made to teach students about the Holocaust, in which Nazi Germany killed more than 6 million Jews and members of other persecuted groups.

The Holocaust is in the current Victorian curriculum but is not taught in all schools, and Mr Merlino said it was often not taught as well as it could be.

He said he hoped more education about the Holocaust would help address racism and prejudice.

"Anti-Semitism is on the rise right around the globe, and sadly we're not immune from it in our own Victorian community," Mr Merlino told the ABC.

"Most kids today wouldn't be able to explain what the Holocaust was, and I think it's vital that each generation understands the horror of the Holocaust to ensure it doesn't happen again."

Mr Merlino said not all government schools in the state were teaching the Holocaust. ( ABC News )

This week, ASIO director-general Mike Burgess said neo-Nazis were emerging as one of Australia's most challenging security threats.

The nation's top intelligence chief said "small cells" of right-wing extremists were regularly gathering to salute Nazi flags, inspect weapons and disperse their "hateful ideology", and warned right-wing extremism had come into "sharp, terrible focus" since the Christchurch massacre.

Mr Merlino said he was particularly concerned about casual racism among young people.

"It's on the sporting field, it's in the playground. We need to tackle this head on.

"If you want to change society you do it in our schools."

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Lessons from the Holocaust 'frighteningly relevant today'

The Government will work with the Victorian Jewish community and the Gandel Philanthropy fund to develop new teaching resources based on adaptations of existing resources from Israel's Yad Vashem memorial and lesson plans produced by the World Holocaust Memorial Centre in Jerusalem.

Not-for-profit organisation Courage to Care, which uses the Holocaust to teach students about bystander behaviour, will receive government funding to establish an ethnic or religious vilification hotline for schools, students and parents.

The organisation will also establish a new student advisory group to look at what can be done to make schools more inclusive.

Jewish Holocaust Centre director Jayne Josem said lessons from the Holocaust were "frighteningly relevant today".

"Which is why this announcement is so significant," she said.

Ms Josem said the sight of a Nazi flag flying over a home in north-west Victoria last month was extremely distressing for survivors of the Holocaust living in Australia.

Jewish Holocaust Centre director Jayne Josem said lessons from the Holocaust were "frighteningly relevant today". ( ABC News: Jayne Josem )

"You can't imagine what that must feel like to them," she said.

"Learning more about the Holocaust and equipping teachers to face this challenging subject gets students to reflect on the world they live in today."

Mr Merlino said he was glad a parliamentary inquiry was underway into Victoria's anti-vilification laws.

The inquiry was announced after Reason Party MP Fiona Patten proposed amendments to extend the Racial and Religious Tolerance Act, and could lead to Nazi memorabilia and flags being banned in Victoria.