In the wide, red land led by an atheist and where evolution has prevailed in its political war with creationism, God has not died. But Australia's almighty has become a far more diverse and divisive deity, still influencing laws and values and maintaining the potential to undermine social cohesion.

The complexity of beliefs haunts policies and legislators. Christians fear suffocation by political correctness and attack from opposing fundamentalism; Muslims, Hindus and Buddhists complain of bias; pagans rail against marriage laws and the ban on pagan chaplains in the military.

Indigenous Australians say their spirituality has been bundled with paganism and dismissed as a valid belief system, further undermining their ability to manage their affairs, and damaging the fragile process of reconciliation.

Laws and customs lodged in traditional Christianity are seen as discriminatory and insulting by other religions. Anti-terror legislation amassed after the September 11, 2001 attacks are regarded by Muslims as an assault on Islam, potentially increasing the alienation that security agencies fear will fuel home-grown jihadists. The impact of religion is felt in federal and state Parliaments, by planning authorities, in schools and workplaces, and in the streets.

This week, Prime Minister Julia Gillard, raised in a Methodist home but now an atheist, repeated her belief in the nation's basic Christian cultural foundation, again rejecting same-sex marriage and euthanasia, endorsing the views of both Parliament's religious right and the nation's wider social conservatism.

Laws, policies and practices remain a highway strewn with landmines: passions and difficulties have grown with a rapidly changing nation, presenting what the Human Rights Commission says is a "vastly more complex religious landscape" than even a decade ago.

The commission's new report on freedom of religion and beliefs was not released until after politicians were briefed in Canberra. Researchers spoke to 274 religious and secularist groups, with Governments, human rights groups and ethnic and city councils, and received more than 2000 submissions.

Their study included Christian denominations from Anglicans and Catholics to Jehovah's Witnesses, Mormons, Christadelphians and Orthodox churches; and to Jews, Buddhists, Hindus, Muslims, Sikhs, atheists, humanists, sceptics, rationalists and pagans.

"The research shows there is a need for education about religions, if we are to reduce ignorance and fear, while promoting inter-group respect," Human Rights Commissioner Graeme Innes said.

Belief in some form of deity remains strong. A 2009 Australian National University survey of social attitudes found 45 per cent of Australians agreed "there is something beyond this life that makes sense of it all", while a third were not sure and 22 per cent disagreed.

But this is a country where Chinese has replaced Italian as the second language and Buddhism is the second-largest religion after Christianity. Even so, the report's findings supported Gillard's instincts: many Australians believe strongly that the nation's values and culture are based on Christian teachings, and these values are reflected in its public ethos and institutions, legal system, and its social and political structures.

"The Christian heritage was seen as critical to how Australia or the Australian Government deals with immigration, legislation, social norms and practices," the report said. "It was seen as crucial to the way Australia understands and identifies itself as a nation."

The report found changes wrought by migration had been too rapid and too diverse, and that new religious diversity challenged, even threatened, the nation's traditional values and social cohesion. It also found widespread concern that too much deference was accorded religious minorities - especially Muslims - at the expense of mainstream values, and that appeasing minority groups threatened core social values.

But minority communities were "acutely aware" of difficulties in making their voices heard and in practising their religion, especially in the face of concerted local opposition, and through reactions to their clothes and appearance.

And while there was broad agreement in the need for education about religion, huge gulfs separate views on how this should be achieved.

Many believed faith-based education was needed to offset the failure of government schools to instil core values, and upheld the right and responsibility of parents to raise their children with these values.

Others argued that faith-based schooling undermined multi-culturalism and tolerance by locking children into their parents' faith, encouraging indoctrination.

Non-Christians were also angered by the expectation that people should swear oaths on the Bible, that Parliaments were opened only by Christian prayers, and that no provision was made for non-Christian holy days in the workplace.

Buddhists complained that visiting monks and nuns under vows of poverty had problems gaining visas and, like Hindus, Muslims and pagans, faced difficulties with burial laws and practices.

Orthodox Christians worried that anti-noise bylaws could prevent midnight bellringing at Easter, Seventh Day Adventists had problems in observing the Sabbath on Saturdays, and Jehovah's Witnesses and Christian Brethren sought recognition of their beliefs against voting, which is compulsory in Australia.

Humanists complained of exclusion and bias in Governments, Jews' institutions and organisations continued to be targets for violent attacks or vandalism. Pagans said they were incorrectly associated with Satanism, faced restrictions on advertising, and were often refused the use of scout or church halls for events.

Muslims reported discrimination against women wearing the traditional hijab head covering, problems in obtaining permission or raising funds to build mosques, schools, and community centres, and workplace difficulties with prayer, dress and fasting during Ramadan.

The report found widespread and deep-seated concern about Islam among other Australians, including perceived intolerance of criticism, punishment for apostates, gender inequality, and the threat of fundamentalist Islam, heightened by a sense that Governments appeased Muslim communities, and that Islam received preferential treatment.

The report also noted arguments that the Muslim community's belief that it was being targeted by security laws had contributed to a climate of fear. Sikhs also felt threatened by harsh anti-terror laws.

"Counter-terrorism legislation has had an enormous impact on ethnic and minority communities, and the effects have been particularly disproportionate on Muslim communities," the Australian Muslim Civil Rights and Advocacy Network told researchers.

"The breadth of the laws, their discretionary or selective application and the way in which the police and security agencies use their extended powers, constrain basic freedom of association, speech and belief."