Councillors will debate a proposal on Tuesday to force business owners to provide English translations to all their signage and ensure English signs are at least as large as their Asian language equivalents.

They will also discuss limiting the amount of advertising shops can display to half their window space - a response to complaints that shopfronts plastered with flyers and leaflets make the district look tatty.

The proposals have divided the community and the council, with one councillor, Saeed Khan, branding them 'outright racist' and 'bordering on paranoia'.

But older residents, many of them Greek and Italian migrants who settled in the area 40 years ago, say the law is long overdue.

'There should be more signs in English,' said Ferruco Visintan, 85, who emigrated from Italy in 1960. 'This is an English-speaking country, you have to use English.'

Vietnamese-owned businesses are particularly reluctant to provide English translations of their signage.

Quoc Thuy Super Fast Pty Ltd, for example, on busy Illawarra Road, offers no clue to non-Vietnamese speakers as to what sort of product or service it provides.

'There are some shops which don't have any English signs, and that's not good,' said Marrickville shopkeeper Michael Tan, 56, who came to Sydney from Hong Kong a decade ago.

But pharmacist Nghi Nguyen, 54, an ethnic Chinese immigrant from Saigon, said 80 per cent of her customers were Vietnamese and of those about half spoke no English.

'So, we have to have a lot of Vietnamese signs,' she said. 'Why does the council want to make trouble over this?'

Tobacconist Xu Wen Juan, 56, from Shanghai, said she would be unhappy with any crackdown on the multi-coloured flyers and posters advertising cheap overseas phone calls and cut-price cigarettes on the front of her shop. 'The posters attract people's eye and bring us more business.'

But the mayor of Marrickville, Morris Hanna, said: 'Some shops cover their whole window with advertising and it creates a very bad look for the area. They should be limited to no more than 50 per cent of the window space.'

The controversy comes at a time of intense debate about how well some immigrant groups integrate into Australian society.

Much of the scrutiny has been directed at Muslims. Recent revelations of home-grown terrorism plots and incendiary remarks by an Islamic leader comparing immodestly dressed women to 'uncovered meat' who invited rape have infuriated many Australians.

Immigrants of all backgrounds have been told by the government that they should learn English as quickly as possible and embrace 'Australian values'.

Prime Minister John Howard is considering introducing a tougher citizenship test under which immigrants would have to take an exam assessing their English skills and knowledge of Australian history and culture.

Almost one in four Australians was born overseas, the highest proportion in more than 100 years - but multiculturalism is being seen in an increasingly negative light.

Mr Howard has spoken of moving away from 'zealous multiculturalism' towards a reassertion of Australia's national identity.

'Multiculturalism and what it means has been caught up in the uncertain environment we live in and the perception that the world out there is a big, scary place,' said Sharon Ride, director of the Federation of Ethnic Communities' Councils of Australia.

'People have a fear of terrorism, and multiculturalism has got mixed up in all that.'

Marrickville resident Melinda Leves, 36, a community services worker, says people should live and let live.

'Marrickville has always been very mixed. The Asian influence means we have great diversity and some fantastic restaurants. Frankly, I think there's more of a problem with graffiti than shop signage.'