Stephen Conroy, the communications minister, asked the search engine to "voluntarily" censor videos that fall within the government's broad new "refused classification" category.
However, Google said blocking access to videos in the category would lead to the removal of many politically controversial, but essentially harmless, clips.
The Australian government is preparing to introduce new legislation that will force internet service providers to block a blacklist of "refused classification" websites, in an attempt to clamp down on pornography and websites used by criminals.
YouTube's own guidelines already block videos featuring sex, violence, bestiality and child pornography. But under the "refused classification" rules, videos featuring subjects as diverse as euthanasia, drug use and graffiti, would also be banned.
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