AN ANTI-RACISM campaign allowing the Federal Government to respond more quickly to ugly flare-ups such as the Cronulla riots and racial abuse of Sudanese migrants in Melbourne will be announced today.

The Diverse Australia Program will provide grants up to $150,000 for projects in areas where racial intolerance is found.

It will replace grants handed out by the Howard government to promote "living in harmony" after a review found there needed to be a stronger focus on racial intolerance.

But Harmony Day, an annual event held on March 21, will be retained after the review found it had high levels of support.

The parliamentary secretary for multicultural affairs, Laurie Ferguson, told The Age the anti-racism campaign would target outer suburbs with high migration levels, such as Noble Park in Melbourne and Rosemeadow in Sydney, the scene of a recent violent brawl.