Queensland State Premier Campbell Newman says his government will consider relocating some residents of a suburb south of Brisbane to defuse racial tensions.
Riot police were deployed in Woodridge in Logan overnight on Monday after emotions boiled over for the third day in a row.
Police met with community leaders on Tuesday as they try to calm residents after violent clashes on Saturday and Sunday in which a house and cars were damaged, the ABC reports.
A number of Aborigines armed themselves with fence palings during the flare-up with Pacific Islanders.
Local leaders say tensions have been simmering since the death of Richard Saunders, an Aboriginie, who was bashed with a hammer during a brawl in Woodrige in 2008.
Woodridge's state MP Desley Scott says Indigenous residents in Logan are feeling swamped by other cultures.
Queensland police say they are not expecting further confrontation between the groups.
No charges will be laid against any youths involved in the latest clash, but local politicians say continued talks between cultural groups are needed to ease tensions.
Mr Newman says he is taking the situation very seriously and a cross-government response may be required.
"We are putting in place the necessary actions. But I also need to say that I want people to obey the law."
Mr Newman says the sorts of things seen at Woodridge over the past few days are not acceptable.