Federal Nationals leader David Littleproud said the "disgraceful" display outside NSW parliament on Saturday should never have been green-lit by police.
"These sorts of animals shouldn't be allowed on the streets to chant that sort of hate," he said on Sunday."That's what they are - they're animals. They're perpetrating hate, they're trying to import hate from overseas into this country and we're better than that."
NSW Police should be held accountable for the oversight in approving the protest to go ahead, Mr Littleproud said.
The protest drew the immediate ire of leaders and Jewish community groups after more than 60 black-clad men unfurled a large banner across the gates of parliament carrying the slogan: "Abolish the Jewish Lobby."
They are believed to be members of the neo-Nazi National Socialist Network.
Barely six weeks into his new job, NSW Police Commissioner Mal Lanyon vowed to get to the bottom of a command-level decision to allow the gathering to take place on Sydney's Macquarie Street.
He conceded police had received notice the rally was going to take place more than a week earlier, but a "communication error" meant he was not personally aware of the planned stunt.
Premier Chris Minns flagged the probability the government would need to give police more powers to deal with such "naked hatred and racism on Sydney's streets".
But Victoria University researcher Mario Peucker said that was a knee-jerk reaction and a more systematic approach was needed to tackle neo-Nazis.
"We now have more laws than we've ever had banning salutes and the swastika but the landscape has changed ... with stunts to attract attention," he told AAP.
"They are strategically quite well positioned to play this (legislative) game."
Similar stunts involving the same group have been held on the steps of Victoria's parliament.
Dr Peucker said it was important to distinguish between white nationalism and neo-Nazism, which the group involved in the rally and other high-profile stunts overtly espoused.
"White nationalism is, in a way, a gateway into a much more radical, extremist, fascist ideology and organisational context."
Executive Council of Australian Jewry co-chief executive Alex Ryvchin said people needed to be unified in combating the neo-Nazi threat, adding he wanted to see police given the powers they needed to surveil and disrupt those involved.
Greens MP Amanda Cohn, the grand-daughter of Holocaust survivors, said the danger of neo-Nazism was not theoretical but giving police more powers was not a sustainable solution.
"As a queer woman and a third-generation Holocaust survivor this threat is both personal and existential," she said.
"This is what happens when racism is ignored or glossed over in the name of cohesion instead of naming it and tackling it head on."
State opposition leader Mark Speakman blamed police for letting the assembly go ahead.
The former attorney-general argued that it was in breach of newly passed laws that made it unlawful to incite racial hatred.
"These neo-Nazi groups are very cunning," he said.
"They sail close to the wind at every opportunity and that means we've got to test the laws that are in place to see whether they're adequate to deal with this behaviour."
