Multiculturalism evolved as a policy in Australia between 1972 and 1989 in response to the growing demands of ethnic minority groups for increased equality and recognition of cultural diversity. During that period, policy makers, in attempting to achieve a balance between the dominant majority and diverse ethnic minority groups, have tried to reconcile the policy tensions deriving from the conceptual contradictions of multiculturalism which espouses the maintenance of cultural identity and the celebration of cultural diversity in a socially cohesive nation, equality and social justice, and more recently, economic efficiency. The Fraser Government responded to these dilemmas by translating multiculturalism into a policy which defined ethnicity in terms of cultural difference, thus emphasising the expressive dimensions of multiculturalism centred in the private domain and ignoring issues of structural inequality centred in the public domain. Thus, ethnic minority interests were accommodated with the minimum threat to the prevailing interests and values of the dominant majority. The Hawke Government, after initial indifference, recast multicultural policy in essentially utilitarian terms by emphasising its economic benefits in the face of deteriorating economic conditions. Accordingly, the Hawke Government placed increased emphasis on the instrumental dimensions of multiculturalism centred in the public domain. These shifts in multicultural policy were reflected in the changing emphases in multicultural education which successive Governments believed to be crucial in the implementation of multicultural policy. The multicultural education policies of the Victorian state Liberal and Labor Governments demonstrate two contrasting approaches in Commonwealth/State relations. Where the state Liberal Government was reactive to Commonwealth policy, its Labor counterpart adopted a proactive position which, initially, was ahead of the Commonwealth Government's policy in many respects. The thesis analyses the ways in which successive Governments have reconciled the policy tensions deriving from the conceptual contradictions of multiculturalism, both to balance competing interests and to adapt the policy to meet changing ideologies and circumstances.