Holocaust denier Frederick Toben has strongly backed the Abbott government's plans to water down race hate laws, describing them as a welcome challenge to "Jewish supremacism" in Australia.

In an explosive submission to Attorney-General George Brandis' review of the Racial Discrimination Act, obtained by Fairfax Media, Mr Toben congratulated the government for its attempt to rectify what he describes as a "flawed law, which only benefits Jewish-Zionist-Israeli interests".

His comments drew immediate anger in the Jewish community, which has warned that the government's plans for Section 18C of the act will open the door to "vilification on a massive scale".

Mr Toben said Senator Brandis – who famously defended people's "right to be a bigot" – had incorrectly claimed the need for reform of the Racial Discrimination Act was about free speech and the conviction of News Corp columnist Andrew Bolt under 18C.

"The essence of what the RDA Section 18C is all about and why it needs to be repealed is that the so-called 'Bolt law' is in effect a 'Holocaust' protection law," Mr Toben wrote.

"The 'Bolt law' case was used in an attempt to hide this Holocaust matter and to make it a free expression issue. The trap set for the multiculturalists in Australia by Jewish interests, who designed Section 18C, is that the sole aim of this section has always been to legally protect ... the Holocaust-Shoah narrative."

Senator Brandis distanced the government from Mr Toben's support on Tuesday, describing him as a "nutter".

"I've never read anything that Mr Toben has said but I'm aware of his views from press reports and views I've heard attributed to Mr Toben are absolute rubbish," he said.

"I don't agree with Mr Toben but I do agree with President Barack Obama who said last week in relation to the Donald Sterling case: 'when people, when ignorant folks want to advertise their ignorance, you don't have to do anything, you just let them talk'."

The Executive Council of Australian Jewry, the Australia-Israel and Jewish Affairs Council, and the Zionist Federation condemned Mr Toben but said it was the government's proposal that would allow him to freely peddle his views.

Mr Toben, a German-born Australian, was found to be in breach of discrimination laws in 2003. He went to jail in 2009 for defying Federal Court orders to remove material from his website that claimed there were no gas chambers at Auschwitz, and describing the murder of millions of Jews during World War II as the "Holocaust myth''.

Executive Council of Australian Jewry executive director Peter Wertheim said: "I am sure the government will derive no joy at all from Fredrick Toben's endorsement of its proposals to water down section 18C and 18D of the Racial Discrimination Act.

"Toben has spent a large part of his life vainly attempting to rehabilitate the disgraced record of Nazi Germany. If the government's proposed changes to the law are enacted, racist rants of this kind will be given a free pass on the basis that they are part of a public discussion.

"Worse still, overtly racist discourse will be given the accolade of freedom of expression. It's time for the government to abandon its ideologically-driven attempt to emasculate laws that have worked well for nearly 20 years."

Tsvi Fleischer of the Australia-Israel and Jewish Affairs Council said the changes proposed by the government were a licence to vilify on a massive scale.

"Toben's submission is more evidence of that," he said. "If the changes go through according to the government's model for comment, we do fear that people like Toben will be able to say whatever he wants – which is usually how evil the Jews are all the time."

Labor senator Lisa Singh said: "Mr Toben is wrong is almost everything he says, except in his claim that the Abbott government's changes would give him licence to continue his racist tirades.

"George Brandis has offended the vast majority of communities and organisations across Australia with his proposals to license racism. The only people still supporting him unequivocally are extremists like Holocaust denier Frederick Toben."

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