"New South Wales parliament will be recalled for a special emergency sitting on Thursday morning to provide police with extra powers to deal with criminals and thugs who are causing disturbances across our city," Iemma said.
He was talking after a second night of race riots left seven people injured and 11 in police custody as youths in a convoy of cars rampaged through streets smashing store windows and attacking parked cars.
The men involved appeared to be of Middle Eastern origin, indicating that they were taking revenge for a riot Sunday during which a mob of 5,000 white men, many drunk and wrapped in Australian flags, attacked several people of Middle Eastern appearance near Cronulla beach.
Sunday's fighting came in retaliation for the beating a week earlier of two volunteer life guards by men described as being of Lebanese descent.
New South Wales Police Minister Carl Scully said rival groups needed to bring an end to the violence.
"They feel slighted and insulted and believe they're entitled to respond to the provocation of those drunken yobbos on Sunday," Scully told Australian Broadcasting Corp. radio.
"(But) they're not entitled to respond in a violent, criminal manner which is what they're doing and the police will continue to round them up while they do so."
Iemma said he would urge lawmakers to pass legislation increasing prison sentences for riot offenses from five to 15 years and double the penalty for affray to 10 years.
Meanwhile, attacks on a Middle Eastern family in the Western Australian state capital Perth and a Lebanese Australian taxi driver in Adelaide in South Australia state have been linked to Sydney's race violence.
Australian Broadcasting Corp. radio reported Tuesday that a family of Middle Eastern origin was attacked in Perth by a group of 11 white men, who threw eggs, shouted abuse and kicked the garage door.
The 42-year-old father, who did not want to be identified, said his family was badly shaken by Monday night's incident.
"I don't know if we were mistakenly identified," he said. "What I definitely know is it was something linked to the escalation in New South Wales."
Perth police Superintendent Shayne Maines said police could not rule out a link between the attack and the racial violence in Sydney. "There was some suggestion they did make ethnically-related comments to the occupant of the house," Maines said.
In Adelaide, a taxi driver of Lebanese origin, Hossein Kazemi, was injured when punched by a passenger during an incident Tuesday.
"There was some sort of discrepancy and argument over the fare," a South Australian Police spokesman said. "Apparently during the assault, the victim, because he was of Lebanese origin, was taunted about the stuff in Sydney and Cronulla beach."
In Sydney, Iemma said the rioters had "effectively declared war on our society and we won't be found wanting in our response."
He said police also would be given new "lock-down" powers to stop convoys from forming and driving into communities to carry out acts of retribution.
Police meanwhile said they discovered weapons including petrol bombs and rocks on the roofs of some houses in the beachside suburb of Maroubra on Monday and arrested a five men armed with weapons including machetes and baseball bats. The men were not charged.
And there appeared no end to the violence in sight with new telephone text messages circulating, one of which called for more fighting next weekend.
"We'll show them! It's on again Sunday," one message said.
Another warned of possible retaliation from the Middle Eastern groups.
"The Aussies will feel the full force of the Arabs as one -'brothers in arms' unite now...," the message said.
In a statement, police said five people were hospitalized in stable condition after being beaten Monday night.
Five men were arrested and charged with offenses including assault, affray and dangerous driving.
Television images of the violence shocked Australians who pride themselves on their tolerance and credit an influx of immigrants with helping build up the country in the post-World War II years.
"This nation of ours has been able to absorb millions of people from different parts of the world over a period of now some 40 years and we have done so with remarkable success and in a way that has brought enormous credit to this country," Prime Minister John Howard said.
Nearly a quarter of Australia's 20 million people were born overseas.
However, tensions between youths of Arabic and Middle Eastern descent and white Australians have been rising in recent years, largely because of anti-Muslim sentiment fueled by the Sept. 11, 2001, terror attacks in the United States and deadly bombings on the Indonesian island of Bali that killed 202 people, including 88 Australians, in October 2002.
About 300,000 Muslims live in Australia, many in lower-income suburbs of large cities.