A church hall was set ablaze and shots were fired near a primary school during a carol concert, fuelling fears of an escalation in violence between ethnic Arabs and whites in the suburbs of Sydney today.

Hundreds of officers were deployed to potential trouble spots, following last Sunday’s race riots on a beach popular with white Australians and young men of Arab descent.

Gangs of Lebanese men retaliated by rampaging through suburban streets and attacking cars and buildings.

Morris Iemma, the New South Wales Premier, said police would pay special attention to places of worship and schools. "We have to be on guard for this. These hooligans and criminals will not destroy the fabric of our society," he warned.

Mr Iemma said a 500-strong anti-riot squad would be deployed throughout the summer to deal with racially-inspired violence.

This would be reinforced by the introduction of tough new laws which would give police special powers to lock-down parts of Sydney and search and confiscate vehicles, a move aimed at cracking down on so-called "smash and bash" raids involving car loads of youths of Middle Eastern origin.

Today’s fire in a church hall next to an Islamic Centre in the suburb of Macquarie and the incident at a primary school in Auburn where parents were abused while attending a carol concert and shots were fired into cars, represents a potentially dangerous escalation of this week’s civil unrest.

Mark Goodwin, Assistant Police Commissioner, said that it had not been confirmed if the fire was linked to the recent violence, but the scene would be examined to determine the cause.

Peace talks were held between representatives of Middle Eastern communities and surf groups in the beachside suburb of Cronulla, where last weekend’s running battles broke out.

Sources insisted that there were no ring leaders organising the violence and revealed that text messages were being distributed urging an end to the violence. Representatives of both sides issued a joint declaration calling for and end to the clashes.

Brad Whittaker, a local surfer, apologised for the behaviour of some white Australians last Sunday. "The day began as a show of solidarity against behaviour of ethnic gangs that have been harassing the public on our beaches over a period of seven years," he explained.

"It escalated out of control under the influence of right-wing racists from outside this community and alcohol," he added.

Representatives of the wider Arab community in Sydney called for a weekend curfew to stop further racial violence. Parents were urged to keep their children at home after 9 p.m. on Friday and Saturday evenings and all day Sunday.

Elie Nassif, spokesman for the Lebanese Community Council, said the measures would help ease tensions. "We are all Australian, we have to protect Australia no matter where you come from or whether you’re born here or you come from overseas," he added.

"We all have to protect our country under the law."

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