Anning attempt to flip this situation as a way to stoke more fear prompted a young man attending his press conference to egg the racist senator.
The senator turns, swears and retaliates by hitting the youth's face before he is restrained by a man nearby.
A member of staff then gets in between the two, while others tackle the teen to the ground where he was held in a choke-hold, ABC reports.
Senator Fraser Anning came under sharp criticism over tweets on Friday including one that said: "Does anyone still dispute the link between Muslim immigration and violence?"
Anning was speaking to media and reportedly talking about "fake refugees" and the "threat of immigration" when the violence broke out.
Earlier, shadow foreign affairs minister Penny Wong condemned Mr Anning's comments as "shameful and pathetic" and said she was " anxious by the rise in extremist views".
The ugly scenes unfolded at a public event in Moorabbin on Saturday afternoon and comes after the Senator released a statement blaming the Christchurch massacre on immigration. It is completely unacceptable.
"While they may be words, words create a certain environment, they embolden certain people, they give them a platform or a sense of confidence that they can do certain things", he said.
Former Australian prime minister Malcolm Turnbull wrote: 'Fraser Anning's comments today are contemptible.
British journalist Piers Morgan also lashed Senator Anning, saying he felt "blind fury" at the remarks.
"It is disgusting and has no place in the Australian Parliament and hopefully the voters will deal with this fellow in the most effective way".
The prime minister announced the government would censure the Queensland independent, after he and Foreign Minister Marise Payne joined the congregation at Lakemba Mosque for prayers on Saturday.
"While families in Christchurch mourn for loved ones they've lost, an obscure Australian Senator saw this act of terrorism and tragedy as an opportunity to blame the murder victims", Mr Shorten said.
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