Morrison gives his version of talks in tense interview with Waleed Aly

Prime Minister Scott Morrison has confirmed he raised the subject of anti-Muslim sentiment at a highly controversial Coalition meeting in 2010, but vehemently denied ever suggesting such sentiment should be exploited for votes.

In a tense and at-times awkward interview with The Project's Waleed Aly on Thursday night, Mr Morrison also acknowledged Islamophobia was a problem in Australia and implied the problem could extend to some individuals in the Liberal Party.

However, he would not commit to placing Pauline Hanson's One Nation below Labor and the Greens on Liberal how-to-vote cards at the upcoming election, saying it would be decided by party operatives at a later date.

For the first time, Mr Morrison gave an account of an infamous shadow cabinet discussion in which he was accused of urging colleagues to exploit concerns about Islam eight years ago.

A report of the interaction - published by The Sydney Morning Herald at the time - sourced the claims from several unnamed colleagues of Mr Morrison. It resurfaced this week after Aly referred to the report in a televised editorial about the Christchurch terrorist attack that has been viewed more than 13 million times.

In a combative exchange with Aly, Mr Morrison confirmed he did raise the subject of anti-Muslim sentiment at the meeting, but rejected accusations he wanted to exploit concerns.

It’s not for the party to answer for every single member on every single occasion.

Prime Minister Scott Morrison

"I was concerned that we needed to address them, which is what I've been doing inside and outside the Parliament for the last 10 years of my life," he said.

"I was acknowledging that there were these fears in the community and that we had to address them - not exploit them. Actually seek to try and address them."

Mr Morrison has always denied the 2011 report - which was corroborated by other journalists - but Thursday's comments represent the first time he has given his account of the shadow cabinet conversation.

He said he had been smeared by his then-colleagues - "two unnamed sources who have never gone public" - and defended his record in working with the Muslim community as shadow immigration minister and later in government.

Last week's mosque shooting in Christchurch has prompted renewed debate about the nexus of far-right groups, mainstream Australian politics, the media and Islam.

In the half-hour televised interview - a rare event for a Prime Minister - Mr Morrison also acknowledged Islamophobia as a problem that needed to be tackled within the Australian community and even within the government.

"There's no doubt that that exists in Australia," he said. "But there's no doubt that so many forms of hatred and stereotyping goes on in the Australian community."

Confronted with a number of examples of his own MPs engaging with the far-right and its ideas on race and immigration, the Prime Minister said he did not believe the Coalition had a problem with Islamophobia collectively.

"I don't think the Liberal Party as a total group that problem - no I don't. And I don't think the National Party has either," Mr Morrison said.

"Our party is made up of a lot of individuals. And in our party individuals have a lot more freedom... to say what they think than a lot of other parties.

"It's not for the party to answer for every single member on every single occasion."

Mr Morrison said the best way to deal with that problem was to "lead by my own example". However, while he again ruled out a "preference deal" with One Nation, he would not commit to placing Senator Hanson's party below Labor and the Greens on Liberal Party how-to-vote cards at the election in May.

"Those matters are determined by the party when we know what the nominations are," Mr Morrison said when asked multiple times. He said he would use his power as party leader to make his views known at the relevant time.