Embarrassed government senators have been forced into a humiliating backdown after originally voting for a motion declaring "it's OK to be white".
Liberal and National senators on Monday backed Pauline Hanson's motion, which also declared "anti-white" racism was on the rise in Australia.
Far-right groups have used those phrases to stoke racial division.
The government's leader in the upper house Mathias Cormann took personal responsibility for the error and apologised to the Senate.
"This is severely embarrassing," he told parliament.
Attorney-General Christian Porter admitted it was his staff's fault.
"An early email advising an approach on the motion went out from my office on this matter without my knowledge," Mr Porter said in a statement on Tuesday.
"This one was not escalated to me because it was interpreted in my office as a motion opposing racism.
"The associations of the language were not picked up. Had it been raised directly with me those issues would have been identified."
The original motion was defeated 31-28 despite support from government senators.
On Tuesday, the Senate voted on the One Nation motion again, this time with the coalition senators voting against it.
Senator Hanson and fellow conservative crossbenchers didn't attend the second vote.
"We need to ensure that our white civilisation, our western civilisation, must be protected and looked after," Senator Hanson told reporters.
Labor and the Greens cast doubt over the government's explanation it was an "administrative error", but Senator Cormann insisted it was true.
"It is often said when wondering when something is a conspiracy or a stuff up, go for the stuff up every time," he said.
Senator Cormann said when the One Nation motion first came up in September the government decided to oppose it and instead make a statement saying it deplored racism of any kind.
But Mr Porter said the recommendation from his office put government senators in a difficult position.
"I simply want to say that the criticism of me and my office is a completely fair cop," he told parliament.
Senator Penny Wong said the phrase was used by neo-Nazis and white supremacists.
"Now you want to come in and say, 'Oops, we made a mistake.' We don't believe you. No-one believes you, and everybody knows this is a just craven and pathetic attempt to try and clean up your mess," she told parliament.
Victorian senator Derryn Hinch said the government was aware of the motion since September, calling the coalition members "a bloody disgrace".
