The hurt and confusion are audible in her voice.

"What should I do then? What should I do then," she pleads with the man.

"Why don't you dress like other Australians," he retorts.

The woman, dressed in a niqab, doesn't know what that means, but the man continues.

"They dress with a f------ face, where's your f------ face? What are you hiding from? F------ Allah?"

By this stage a number of bystanders at the Perth shopping centre have stopped to observe the exchange - none have intervened.

"This is how I feel comfortable," she tells him, before being told to "f--k off".

The man paces off, another woman deigns to call him a d--head before he disappears into the crowd.

It's exchanges such as these, caught on hidden camera for SBS program 'Is Australia Racist?', that highlight a distinctly Australian paradox.

Findings from one of the largest surveys conducted on racism and prejudice in the country have revealed that while 80.4 per cent of respondents believe it is a good thing for society to be made up of different cultures, 63 per cent of the sample also felt some discomfort with, or intolerance of, Muslim Australians.

Lead researcher Professor Kevin Dunn of Western Sydney University said the findings from the Challenging Racism Project were cause for alarm.

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"The level of negative feeling towards some groups in Australia is now too high," he said.

"On the basis of this data and other data ... we are facing almost a national calamity in terms of what is called Islamophobia."

The study, commissioned by SBS and conducted by Western Sydney University, marks the beginning of the broadcaster's Face Up To Racism week, a week-long exploration of racism and prejudice in Australia today.

And while 76 per cent of respondents to the survey expressed a commitment to personal action when it came to challenging racism, as this incident made clear, it would appear that as far as religious tolerance is concerned, Australia still has a long way to go.

- With Kirsty Johansen

'Is Australia Racist?' airs at 8.30pm Sunday, February 26 on SBS.