Labor is calling for Prime Minister Scott Morrison to sack Liberal candidate Jeremy Hearn after Melbourne's Herald Sun newspaper exposed a conspiracy-laden anti-Muslim rant he posted online last year.
"Refusing to sack him is incredibly weak and frankly, how can Scott Morrison excuse him?" Shadow Attorney-General Mark Dreyfus told AM.
"Jeremy Hearn is an Islamophobe, his comments are hate speech, they are abhorrent and an apology is not enough," he added.
Mr Dreyfus is battling Mr Hearn for the South East Melbourne seat of Isaacs.
The Liberal hopeful's comments included several suggestions Muslim Australians were hiding their true intentions, which he said were to overthrow the Australian government and introduce Sharia law.
After the story broke he apologised "unreservedly" and said the comments were "not right".
Liberal Campaign Headquarters did not respond to the ABC's questions about whether Mr Hearn would continue as the endorsed candidate.
Labor, meanwhile, is on the defensive over its campaign in the neighbouring seat of Goldstein.
It has been forced to pulp how-to-vote cards after preferencing a former One Nation supporter who espoused anti-Jewish conspiracy theories — including notions that Jews are descended from lizards — ahead of the sitting Liberal member Tim Wilson.
Liberal Senator James Paterson said the views of the candidate, John Tiger Casley, were easy to find online.
"It would not have been hard at all for the Labor Party to do the due diligence and they made a decision to put him above a candidate who is well known from a mainstream political party," Senator Paterson told AM.
And he added Labor had not followed through on its promise to pulp all how-to-vote cards preferencing Mr Casley.
"At the very least they've been very slow in getting out a new how-to-vote card if not deliberately continuing to hand out a how-to-vote card with an extreme candidate on it," Senator Paterson told AM.
The seats shaping the election
Meanwhile, the Cairns Post has published pictures of Queensland One Nation candidate Ross Macdonald touching strip club workers at a series of bars in Thailand.
The new scandal comes just a day after another One Nation candidate, Steve Dickson, quit in disgrace after he was filmed at a US strip club.
That scandal brought One Nation leader Pauline Hanson to tears during an interview with Channel Nine.
