Police said seven people were injured and 11 were arrested in the latest flare-up of ethnic tensions.

Any hopes that the race riot on Sunday would be an isolated incident were shattered after dark when car-loads of youths rampaged through southeastern Sydney chased by hundreds of police vehicles and a helicopter.

There appeared no end to the violence in sight: new telephone text messages were circulating, one calling for more fighting next weekend. "We'll show them! It's on again Sunday," the message said.

Vein of racism

Another message spoke of possible retaliation from the Middle Eastern groups. "The Aussies will feel the full force of the Arabs as one," it said. "Brothers in arms unite now."

John Howard, the prime minister, who was about to travel to a summit in Malaysia, said the rioting would probably have no long-term impact on Australia's reputation overseas.

"You have outbreaks of domestic discord that happens to every country and when it occurs there's publicity, but people make a judgment about this country over a longer term," he said.

"They don't make judgments about Australia on incidents that occur over a period of a few days."

A police spokesman said the violence on Monday started in Cronulla, where  riots had broken out the previous day, and appeared to be retaliation by men of Arab or Middle Eastern descent.

On Sunday, a mob of 5,000 white men, many of them drunk, attacked men they believed were of Middle Eastern descent in retaliation for the assault a week earlier of two volunteer lifeguards, allegedly by youths of Lebanese descent.

"I do not accept that there is underlying racism in this country"

John Howard, prime minister

Howard called the violence "sickening", but denied that it was underpinned by a vein of racism running through Australian society.

"I do not accept that there is underlying racism in this country," he said. "This nation of ours has been able to absorb millions of people from different parts of the world over a period of now some 40 years and we have done so with remarkable success and in a way that has brought enormous credit to this country."

In the last census in 2001, nearly a quarter of Australia's 20 million people said they were born overseas.

However, tensions between youths of Arabic and Middle Eastern descent and white Australians have been rising in recent years, largely because of anti-Muslim sentiment fuelled by the attacks in the United States in September 2001 and subsequent bombings on the Indonesian island of Bali.