Dame Edna has made for an awkward night of television after calling Waleed Aly 'little Wally' and saying he wouldn't believe in 'making bed fun' before using a derogatory term for the political left.

The Aussie icon, a character played by Barry Humphries, joined Channel Ten's The Project on Thursday night and was quickly accused of being 'aggressive' to Gold Logie nominated host Aly.

He welcomed her to the program and asked how she'd been, when Edna then responded: 'I'm going very well, little Wally' - before she ignored the panel's questions and repeatedly jibed Aly.

Dame Edna has repeatedly jibed Waleed Aly on Channel Ten's The Project on Thursday night

When Aly asked Edna, an Aussie icon played by Barry Humphries, she said: 'I'm going very well, little Wally'

'And I have to tell the viewers, that he really does look like this. He does! It's not a trick of the lights!'

After awkward laughter and looks of confusion, Aly replied: 'I'm just trying to figure out what response you are looking for here.'

Dame Edna was on the program to endorse Peter Alexander brand pyjamas, and joked about 'making bed fun'.

'Now, I don't know if you believe in that, Waleed,' she added.

'And I have to tell the viewers, that he really does look like this. He does! It's not a trick of the lights!' Edna said to Aly

After awkward laughter and looks of confusion, Aly replied: 'I'm just trying to figure out what response you are looking for here'

Co-host Peter Helliar brought up the queen's 90th birthday, which Edna said was 'wonderful' before continuing: 'Waleed doesn't think so. I bet you are an old pinko, aren't you?'

Pinko is a derogatory term used to describe someone left-wing or sympathetic to communism.

Aly responded that he liked the queen and had recently visited Buckingham Palace.

Edna also had something to say about Aly's takedown of Malcolm Turnbull's policy to keep negative gearing – which aired on The Project the night prior.

'I would disagree with Waleed,' she said out of nowhere. 'I think Mr Turnbull is a very strong and very impressive Prime Minister.'

Co-host Peter Helliar brought up the queen's 90th birthday, which Edna said was 'wonderful' before continuing: 'Waleed doesn't think so. I bet you are an old pinko, aren't you?'

Aly responded that he liked the queen and had recently visited Buckingham Palace, though he admitted he is a republican

Viewers on Twitter reacted, accusing Edna of being 'super awkward and passive aggressive' to the host.

In his Something We Should Talk About segment on Wednesday night, Aly criticised Mr Turnbull's support for negative gearing.

He likened Bill Shorten to a 'party pooper' phoning police to make a noise complaint.

But, Aly said, 'it's time to shut this party down' so houses can be less of an 'investment for the rich, and a bit more of a, you know, a home'.

Aly criticised the claim that 'all walks of life' use the tax avoidance measures to invest in properties, providing a list of the top ten electorates that claim the highest average losses through negative gearing.

'Up the top there is Wentworth. The Prime Minister's own electorate,' Aly said. All ten electorates were Liberal Party seats.