Attorney-General Nicola Roxon has sent a proposed overhaul of anti-discrimination laws back to the drawing board and wants a controversial section dumped.
Department officials are reworking the contentious exposure draft and will remove a controversial section which prohibits conduct that offends, insults and intimidates.
Ms Roxon said officials from her department would present a series of new options to the parliamentary inquiry examining the bill.
Asked why the section was put into the draft in the first place, Ms Roxon said it was an attempt by the drafters to consolidate existing laws and take court decisions into account.
She denied the wording was clumsy.
"It's a difficult job when you're putting five different pieces of legislation into one," Ms Roxon told ABC radio. "I don't think this attempt was successful."
The controversial section has attracted staunch criticism from the opposition and from legal and human rights experts.
The draft legislation is designed to amalgamate five statutes covering age, disability, race, sex and other forms of discrimination into a single statute.
"We are certainly not trying to encroach on freedom of speech," Ms Roxon said.
"It seems to me that there are better options than the one being proposed."
Almost 600 submissions have been made to the Senate committee on legal and constitutional affairs.
"Sometimes this is an odd thing in politics. If you don't consult enough you can be criticised and if you do people want to run a campaign as if this is already law," Ms Roxon said.
Australian Greens Senator Penny Wright praised the decision to dump the section, which she described as "unintentional over-reach and drafting error".
Australian Lawyers Alliance national president Tony Kerin said the controversial section potentially hindered free speech.
"This would have placed an unnecessary chill on public debate," he said in a statement.
