World events had "emboldened" people to discriminate against Muslims, the survey`s lead author said.
However, 86% of the respondents believed that relations between Australian Muslims and non-Muslims were friendly.
The survey was conducted by Western Sydney and Charles Sturt Universities, and the Islamic Sciences and Research Academy.
Western Sydney University Professor Kevin Dunn, who led the study, said: "Because of things that are happening in the world and the various representations of Muslims - and these are problematic - it means that some people unfortunately feel more emboldened to say things and do things which are prejudicial and which are hurtful towards Muslims."
`Marginalised`
The survey also found that unemployment in respondents at 8.5% was much higher than the Sydney average of 3.7%, and that 62% of those surveyed had experienced racism in the workplace or when seeking a job.
However, despite the levels of discrimination, most Muslims said they identified as Australian and felt a sense of belonging to the country.
""The minority of Australians who did discriminate against Muslims could be leaving them "vulnerable to radicalisation", said Prof John Esposito, a keynote speaker and founding director of the Prince Alwaleed Bin Talal Centre for Muslim-Christian Understanding, ABC News reported.
"One of the things that does wind up alienating some youth is the extent to which anti-Muslim and anti-Islamic diatribe, hate crimes, attacks on mosques make people feel alienated and marginalised from their societies," he said.
"But I think a lot of it also has to do with Western foreign policies."
Muslims make up about 2% of Australia`s population.
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