By Jonathan Barrett

SYDNEY (Reuters) - Race relations in Australia have deteriorated so badly that some community leaders fear violence will erupt in a political vacuum where the new government, elected with a bare majority, must rely on the support of parties that have fomented the discord.

The potential for violence after a bitter election campaign, which featured calls for a ban on Muslim immigration, is palpable for people like Afghan-born Muhammad Taqi Haidari.

Haidari, from Afghanistan's Shi'ite Muslim Hazara minority, no longer tells people his name is Muhammad, preferring to use Taqi.

"When there is a problem like in Paris and now in Nice they hear the name Muhammad. They include me as one of those Muhammads," Haidari, who lives in Sydney's less affluent western suburbs, told Reuters.

Australia, a staunch U.S. ally with troops in Afghanistan and Iraq, has been spared the mass violence that has become commonplace among other U.S. allies, particularly in Europe.

In barely more than a month, scores of people have been killed in Paris, in smaller French towns such as Nice, and across Germany, many of them in attacks claimed by the militant Islamic State group.

Machete-wielding attackers and suicide bombers have also struck with devastating effect in Bangladesh and Kabul.

In Australia, once fringe parties such as Pauline Hanson's One Nation, which first gained international notoriety in the late 1990s, have exploited the fear such attacks have generated by saying that Muslim immigration must be stopped.

However, community leaders such as Stepan Kerkyasharian, a veteran former head of a government anti-discrimination board, fear their rhetoric will also generate retaliatory acts against Muslim migrants.

POTENTIAL FOR VIOLENCE

That is an even more pressing concern after the narrow win secured by Australia's conservative coalition in July 2 elections, which also gave a stronger voice to fringe political players like Hanson.

"The intensity and feeling has been there for some time but it has now made it into the public discourse. It would be a serious mistake to underestimate the potential for violence," Kerkyasharian told Reuters.

"Unfortunately there has been a reluctance on the part of political leadership to engage people in rational debate and discussion on this matter," he said.

Race relations have threatened to erupt in the barely four weeks since Hanson secured her return to the Australian parliament. Her public appearances have attracted protesters and supporters in numbers rarely seen in Australian politics.

Outwardly easy-going and peaceful, Australia has a troubling race relations record. The White Australia Policy, which was only dismantled in the late 1960s, favored European migrants over non-whites. Australia's Aborigines were administered under flora and fauna laws until then and remain far behind the rest of the population in literacy, health and economic standards.

There have also been racial flashpoints before. In 2005, riots broke out in the Sydney beachside suburb of Cronulla between white residents and Lebanese from other suburbs, gaining international notoriety.

Duncan Lewis, director-general of the Australian Security Intelligence Organisation, told a parliamentary committee in May that as many 59 Australians had been killed fighting with Islamic State in Iraq and Syria.

So it is not entirely surprising that many ordinary Australians, and even morning TV show presenters, have come out in favor of Hanson's Muslim immigration ban, stirring fierce debate on prime-time television and on social media.

Her unexpectedly influential position after an indecisive election - Hanson and a small handful of others will likely form a bloc whose vote will determine the passage or rejection of legislation - mean that mainstream politicians ignore her at their peril.

Foreshadowing that newfound influence, Hanson released a video message on Monday after meeting Prime Minister Malcolm Turnbull, telling her supporters they had discussed several policies and that he was "prepared to listen to me".

RISE OF THE RIGHT

The rise of One Nation in Australia echoes what has been seen in Europe, where centrist governments are being challenged by right-wing, anti-immigration parties after hundreds of thousands poured in, fleeing war in Afghanistan, Syria and Iraq.

Brian Burston, who represents Hanson's One Nation in New South Wales, Australia's most populous state, said a moratorium on Muslim immigration was needed to alleviate community fear.

"You can't discern between the different groups and you don't know whether there's ISIS infiltrators in any of them," Burston said.

"The weapon of choice now is a truck. What next? It's just frightening," he said, singling out the attack in Nice.

Hanson told Reuters that banning new mosques and Muslim immigration were issues that resonated with voters. She did not respond to more recent requests for an interview.

Muhammad Ali, a 30-year-old Afghan who lives in Sydney, said her anti-Islam comments were already putting people at risk.

"Hanson has a right to speak," Ali said. "But will she take responsibility for what happens as a result of her words?"

(Reporting by Jonathan Barrett; Additional reporting by Yuzuha Oka; Editing by Paul Tait)