The findings show Sydney is home to a higher percentage of people born overseas than Melbourne, but they are typically poorer and concentrated in fewer suburbs than those in the southern state.

The targets of racism in Australia have also changed — the Indian community is now most often singled out rather than the past focus on people of east Asian descent, despite official attempts in recent years to calm anger over a spate of attacks on Indian students.

The stocktake of attitudes towards immigrants in Australia's two largest cities offers a rare and fascinating insight into the community's experience of a growing national population — up 3 million in the past decade, a figure that includes births as well as the migrant intake.

The results show 29 per cent of Sydneysiders hold a negative view of Muslims, compared with 15 per cent in Melbourne.

The violent protests in Sydney's CBD last month over the depiction of Muslims in an American-made film sparked fears of a return to the tensions that followed the 2005 Cronulla riots, prompting an immediate condemnation from Islamic leaders.

But the survey findings also warn of broader problems creeping into immigrant neighbourhoods in both cities, with people born in Australia more likely to feel vulnerable in their homes than those of non-English-speaking backgrounds.

The research, to be released today, is built on data collected over several years by Monash University, backed by the Scanlon Foundation and the Australian Multicultural Foundation.

The extensive surveys, drawing on a sample of 15,000 people, also delves into the fears and aspirations right across the country — with the economy, the quality of politicians, and boats ferrying asylum seekers ranked as the three most serious problems facing Australia. Boat arrivals are toxic for the Gillard government: the results show only 6 per cent of people think Labor is doing a good job, compared with an overwhelming 66 per cent vote of disapproval.

And underscoring the deep divides the explosion of boat numbers is creating in the community, Greens supporters have almost completely broken away from the mainstream in sympathy for asylum seekers.

Only one in four people believe people arriving by boat should be eligible for permanent residence, whereas 62 per cent of Greens voters are in favour.

The survey is not all bad news. A majority is convinced by the statement, "Australia is a land of economic opportunity where in the long run, hard work brings a better life" — an optimism especially felt among people who speak a language other than English at home.

"Many immigrants are actually more positive about Australia than the Australian-born because their reference point is where they come from," study author, Andrew Markus, told The Age.

But a breakdown of the findings, examining migrant hubs in Sydney and Melbourne around Bankstown and Dandenong respectively, suggests trust is fraying between migrants and those born locally.

Third-generation Australians — defined as a person born in Australia of parents also born in Australia — are far more likely to be dissatisfied living in one of these neighbourhoods.

Third-generation Australians are also twice as likely than those of non-English-speaking backgrounds to report life in their local area has become much worse and see the migrant intake as "too high".

Hass Dellal, of the Australian Multicultural Foundation, said the split between Sydney and Melbourne on views of Muslims resulted from more work in Victoria to engage the Islamic community.

Dr Dellal said it was crucial to engage younger Muslims to stop feelings of marginalisation.