A Kiwi rights lobby in Australia is threatening legal action against Rupert Murdoch's News Corp after its papers ran stories painting New Zealanders as dole bludgers and backdoor migrants.

David Faulkner, of the OzKiwi website, said he was appalled by articles that appeared on Saturday in Brisbane's Courier Mail, the Northern Territory News and other Murdoch-owned mastheads featuring headlines such as "Kiwi layabouts are flooding in", and "Immigration back door".

He said the articles played on statistically dubious, racially charged stereotypes of New Zealanders - especially Pacific Islanders and Asians.

"We believe it's unlawful racial vilification, which breaches the Racial Discrimination Act," Faulkner said.

"It appears to be little more than a racist beatup based upon deceptively presented and ill-interpreted statistics in order to fabricate a story during the slow Christmas period."

OzKiwi has drafted a letter of complaint to News Corp, which it has posted on its Facebook page.

It has gathered more than 1000 signatures for a "massive class action" against the media giant, which would be launched if the group did not receive a retraction and apology, Faulkner said.

He accused News Corp of promoting myths of the Kiwi dole bludger and the idea that migrants used New Zealand citizenship as a "backdoor" route into Australia.

"The stats show the opposite," Faulkner said. As of July last year, the unemployment rate for New Zealand-born residents was 4.8 per cent, compared with 4.9 per cent for their Australian-born counterparts.

New Zealand-born residents had a 78.2 per cent workforce participation rate, against 68 per cent for those born in Australia, government statistics show.

Any Kiwis who have arrived in Australia since 2001 are not eligible for the dole until they have lived there for 10 years.

Faulkner said it was dangerous for both countries to have the press pushing the bludger stereotype, along with claims in the Courier Mail that "tens of thousands of South Pacific and Asian migrants are using NZ as a back door to duck Australia's tough migration controls".

Another News Corp article said Australia's "welfare crackdown is forcing jobless Kiwi migrants to sardine into shared houses with friends and extended family on the fringes of major cities".

"People think you've got all these coloured people - not the nice white people - sneaking in through the back door from New Zealand," Faulkner said.

"Is News Corp only concerned about the possibility of ‘backdoor' migration by non-Europeans? If we keep going this way, we're heading to further deterioration between the two nations."

OzKiwi says the coverage zeroes in on New Zealanders of Pacific Island, Asian, African and Middle Eastern descent, but not those born in Britain, who were the largest migrant group in New Zealand and typically the largest group of foreign-born Kiwi citizens settling in Australia.

The group says the timing of the coverage is ironic at a time when the net loss of New Zealanders moving across the Tasman was down nearly 15,000 on 2012 figures.

Foreign Affairs Minister Murray McCully said the Government was aware of the problems faced by some Kiwis living in Australia.

"New Zealanders planning to move to Australia need to make sure they are aware of their rights and entitlements, and make sure they have backup if things don't go to plan," McCully said

New Zealanders had the most free access of any foreign citizens to live, work or study in Australia.

"Freedom of movement across the Tasman is a longstanding pillar of the Australia-New Zealand relationship. It benefits both countries, and both governments are committed to retaining this."

Brett Sutton, a Kiwi who has lived in Sydney for five years, said the way the issue was perceived was similar to how both New Zealanders and Australians were seen by other nationalities when they went on their OEs to the UK.

"It's about the way we carry ourselves over here - it depends on age, experience and social class, but I don't think we're victimised."