"There has been a large majority of Australians (who) wish to see the banning of the burka," said Ms Hanson, an outspoken fan of President Donald Trump, as senators objected.
Attorney-General George Brandis drew applause when he said his government would not ban the burka, and chastised Ms Hanson for what he described as a "stunt" that offended Australia's Muslim minority.
"To ridicule that community, to drive it into a corner, to mock its religious garments is an appalling thing to do and I would ask you to reflect on what you have done," Mr Brandis said.
Opposition Senate leader Penny Wong told Ms Hanson: "It is one thing to wear religious dress as a sincere act of faith; it is another to wear it as a stunt here in the Senate."
Sam Dastyari, an opposition senator and an Iranian-born Muslim, said: "We have seen the stunt of all stunts in this chamber by Sen. Hanson."
"The close to 500,000 Muslim Australians do not deserve to be targeted, do not deserve to be marginalised, do not deserve to be ridiculed, do not deserve to have their faith made some political point by the desperate leader of a desperate political party," Mr Dastyari said.