Police in Sydney will be given tough new powers to crack down on rioters, the New South Wales premier has said.
Police have already made a number of arrests
The state parliament will meet on Thursday "to deal with criminals and thugs who are causing disturbances across our city", said Morris Iemma.
He was speaking after a second night of race riots left seven people injured.
Gangs of young men of Middle Eastern appearance rampaged through the suburb of Cronulla, in apparent revenge for attacks by white youths on Sunday.
In the adjacent suburb of Brighton-Le-Sands, crowds threw rocks at police cars and passing motorists. A total of 11 people were arrested, and a reporter in the area described scenes of "chaos".
The New South Wales authorities will seek to grant police the power to close bars and shops selling alcohol during times of unrest, Mr Iemma told a news conference on Tuesday.
They will also investigate the use of so-called lock down zones, involving "road closures, cordoning off a certain area... [and] cars being able to be randomly searched," Mr Iemma said.
"I won't allow Sydney's reputation as a tolerant, vibrant international city to be tarnished by these ratbags and criminals who want to engage in the sort of behaviour we've seen in the last 48 hours," he added.
The violence started on Sunday, when thousands of young white men attacked people of Arabic and Mediterranean background on Cronulla Beach - apparently in revenge for a recent attack on two lifeguards.
Many of the rioters had been alerted to congregate in the area by receiving mobile text messages.
The fighting then spread to other parts of the city, injuring more than 30 people, including police officers.
The violence continued on Monday night, despite calls for calm and ethnic tolerance by Prime Minister John Howard and other senior figures.
There is little sign that the situation is easing, with reports of new text messages being sent in the Sydney area, calling for more violence next weekend.
"We'll show them! It's on again (on) Sunday," the Associated Press quoted one message as saying.