Jewish leaders have warned Australia could be sleepwalking into a Nazi nightmare after video emerged of white supremacists holding a bootcamp at a Melbourne beach.

The group, which included children, ran military-style drills on Elwood Beach in an exercise that caused anger and outrage.

“These losers came and did a workout in the park and then tried to play tough by putting up a racist symbol,” Labor MP Josh Burns told 9News.

Jacob Hersant, the man jailed last year for performing the now-illegal Nazi salute, was among the group, as was a male child.

They performed boxing drills before being joined by female supporters for a chat.

“These evil men are trying to build a Hitler Youth in the heart of Melbourne. It should frighten and concern every Australian,” Dr Dvir Abramovich from the Anti-Defamation Commission said.

The group’s actions were not illegal. There appeared to be no swastikas on display and no Nazi salutes being performed.

Even so, some Jewish leaders say the mere existence of the group itself should be outlawed.

“We introduced laws to outlaw the Nazi salute and if we need to increase the number of symbols that are outlawed so that they can get the clearest of message that that silly flag that they tried to hold up in the middle of our beautiful suburb isn’t acceptable, then so be it,” Burns said.

The state government was scathing.

“It’s a blatant, outrageous display publicly to gain attention,” Environment Minister Lily D’Ambrosio said.

But Abramovich warns this could be more than that.

“If Australia doesn’t wake up to this ticking time bomb. We will wake up and realise that something terrible has happened,” he said.