SYDNEY - Australian Prime Minister Kevin Rudd said his Chinese son-in-law has worried him with stories about racism, but he believes Australia is a tolerant country despite recent violence against Asians.

Rudd, whose eldest child Jessica married Hong Kong-born banker Albert Tse in 2007, denied that Australia was fundamentally a racist nation.

"My son-in-law's Chinese, from Hong Kong, I hear stories from him from time to time which make me really worried about what might be going on out there," the prime minister told ABC Television late Monday.

"But his overall story is that he's completely accepted and part of the Australian family."

Rudd, who was speaking at a televised question and answer forum with young people in Canberra, said his experience of Australia over many years was that it was a very tolerant nation.

He said he was sickened to hear that one young Indian man in the audience had been pushed around and had racist comments directed at him by teenage drunks on the country's national day last month.

"That's a really awful story and makes me sick," Rudd said. "It really makes me sick that anyone would treat you, as a guest in our country, like that. It's wrong."

He said the government was working to improve the safety of Indian students after rising numbers of assaults and robberies against them, but warned Australians to keep "a weather eye on any of this stuff ever taking hold".

"Because this country Australia is and shall be a tolerant country and we have a combined responsibility... to keep it that way," he said.

Australian officials have downplayed racism as a motive for the attacks on Indians, which have prompted media outrage in India.