Australian foreign minister Bob Carr says late British leader Margaret Thatcher made "unabashedly racist" comments, recalling what she allegedly said to him about Asian immigration after she left office.
Carr said the conservative "Iron Lady", who died in London on Monday, had told him Australia could end up like Fiji "where the Indian migrants have taken over".
While Labor stalwart Carr, who has a Malaysian-born wife, said he respected Thatcher for the boldness of her political leadership, "on 100 other things I would pick arguments with her".
"I recall one conversation I had with her in her retirement where she said something that was unabashedly racist," he told ABC television late Tuesday from China.
"She warned Australia -- talking to me with Helena (his wife) standing not far away -- against Asian immigration, saying that if we allowed too much of it we'd see the natives of the land, the European settlers, overtaken by migrants," he added.
Carr said: "I couldn't believe it.
"It reminded me that despite, yes, her greatness on those big questions, the role of the state, the evil nature of the communist totalitarianism, there was an old-fashioned quality to her that was entirely out of touch and probably explained why her party removed her in the early 90s."
Carr, a former premier of New South Wales state, said Thatcher used the Pacific island nation of Fiji to illustrate her point.
"I remember one thing she said as part of that conversation. She said 'You will end up like Fiji'.
"She said 'I like Sydney but you can't allow the migrants' -- and in context she meant Asian migration -- 'to take over, otherwise you will end up like Fiji where the Indian migrants have taken over'.
"I was so astonished I don't think I could think of an appropriate reply."
Carr's opposite number in Australia, Julie Bishop, called his comments graceless and demanded he immediately apologise.
"His decision to make these claims after her death is a crude attempt to slur the reputation of one of the 20th century's most outstanding leaders," Bishop said.
Thatcher, Britain's first female prime minister and its longest serving premier of the 20th century, was a divisive figure, with critics saying she destroyed millions of lives with her free-market economic policies.
Her supporters have called her the greatest British leader since Winston Churchill and tributes have flowed from world leaders, who hailed her role in bringing down communism.
On Tuesday Australian Prime Minister Julia Gillard praised Thatcher, who was 87, saying she had "changed history for women" by opening the door to females taking high-powered leadership roles.
Britain's Queen Elizabeth II will lead mourners at Thatcher's funeral next week, the first time the monarch will have attended the ceremony of one of her former prime ministers since Churchill died in 1965.