Queensland Premier Annastacia Palaszczuk has announced she will strip Katter's Australian Party of five extra staff positions it was granted last term, after it refused to denounce federal senator Fraser Anning's contentious maiden speech last month.

Senator Anning used his maiden speech in Federal Parliament to call for a complete overhaul of the immigration system, insisting most migrants should be from a European Christian background and all Muslims should be banned.

In that speech, he also used the phrase "final solution", the same phrase used by the Nazis under Adolf Hitler meaning annihilating Jewish people from Europe.

Mr Anning called for a plebiscite for the public to decide if there should be "wholesale non-English speaking immigrants from the third world, and particularly whether they want any Muslims".

He also claimed "certainly all terrorists these days are Muslims" and had previously described some migrants as "transnational parasites".

Sorry, this video has expired Senator Anning said immigrants should 'reflect the historic, European Christian composition' of society.

Ms Palaszczuk had called upon the KAP to denounce Senator Anning or face losing the five extra discretionary staff granted to the state party last term during the hung parliament.

The ABC understands this includes three parliamentary staffs and two electorate staff members, and the move could be halted if the KAP changed its position.

Fraser Anning is the voice of Katter's Australian Party in the Senate, with Bob Katter in the House of Representatives.

The party also has three MPs in the Queensland Parliament, led by Bob Katter's son Robbie.

"Because his party will not denounce Senator Fraser Anning, I denounce his party," she told the Labor State Conference on Sunday.

Ms Palaszczuk said "racist extremism will not be tolerated".

Queensland Premier Annastacia Palaszczuk (R) said Senator Fraser Anning's comments were "indefensible". ( AAP )

"To believe as we do in equality and basic human rights means we do not merely support their existence … we stand up to and call out those who would rip them way," she said.

"No-one uses the words 'final solution' except in sorrow, anger and shame.

Ms Palaszczuk said her own grandparents fled the work camps and appalling conditions and misery of World War II to come to Queensland.

"We have the right to free speech in our parliaments, but that free speech is not free of consequence," she said.

"I am withdrawing the additional staff I granted to the Katter's Australian Party because it tolerates the intolerable and defends the indefensible."

Sorry, this video has expired Bob Katter says Fraser Anning's speech was 'solid gold'

State leader Robbie Katter was unaware of the decision when contacted by the ABC.

"When we're taken completely out of context and they try and sensationalise everything, I'm not going to apologise on that basis," he said.

"If the Premier wants to poke the bear, go ahead, be my guest."

The ABC understands the Premier is still willing to reconsider, if the Katter Party does the same, and denounces Senator Anning's comments.

"They haven't said anything about that and I think if the Premier took the time to acknowledge what we're actually trying to say on the issue of immigration I think they wouldn't be so offended," Robbie Katter said.

Senator Anning, a former One Nation Senator, is also still standing by his comments.

LNP spokesman Tim Mander said the extra KAP staff were "above the allocation that they deserve."

"Annastacia Palaszczuk made this agreement in the last term of Parliament because they needed their vote. They continued it this term just as a back-up plan. Now they realise they don't need the Katters," he said.

Mr Mander called on the Government to put the KAP last on the how to vote cards in North Queensland next election.

"It's a sweetheart arrangement with the Palaszczuk Government," he said.

Widely condemned speech was 'magnificent': Bob Katter

Senator Anning was unmoved by the widespread criticism he received after the speech and his party leader Bob Katter has called the speech "magnificent" and "solid gold".

Mr Katter said he discussed the speech with Senator Anning before he delivered it.

"His speech was absolutely magnificent and it's everything that this country should be doing."

Then minister for multicultural affairs Alan Tudge said Senator Anning's comments did not reflect the views of the Government.

Senator Anning replaced One Nation's Malcolm Roberts in Parliament after Mr Roberts was found to be a dual citizen.

The ABC Fact Check unit found Mr Anning has also made incorrect statements about the number of Australia's working-age Muslims not in the workforce.

Senator Anning's speech was reminiscent of Pauline Hanson's first speech as an MP in the mid-1990s.

The One Nation founder called for multiculturalism to be abolished, saying Australia was in "danger of being swamped by Asians".