Tony Abbott has decided to dump changes to 18C of the Racial Discrimination Act at a time when his government is beefing up anti-terror laws.

The Prime Minister made the announcement alongside Foreign Minister Julie Bishop and Attorney General George Brandis after Cabinet met in Canberra.

The Coalition had been criticised for the proposed repeal of section 18C, which currently makes it unlawful to "insult, offend and humiliate" a person or group.

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