The coalition is being warned it risks becoming indistinguishable from One Nation as it toys with a preference deal with the party.
The prime minister has fired a shot at the coalition as experts say issues behind One Nation's rise rise in popularity have been bubbling away for decades.
One Nation has pulled ahead of Labor as the most popular party in the nation in latest polling, while the coalition has sunk to a distant third in its standing with voters.
But Anthony Albanese challenged Pauline Hanson's party to come up with solutions to issues plaguing voters rather than being a party of grievance.
He also accused the coalition of trying to mimic One Nation.
"The problem for (Opposition Leader) Angus Taylor is that if he tries to out-One Nation One Nation, then they become indistinguishable and people more and more will go towards what they see as the real thing," Mr Albanese told reporters in Bendigo on Tuesday.
"The problem is when it comes to solutions ... if you're serious about government, you've got to come up with solutions."
Opposition Leader Angus Taylor said the coalition would work with others to defeat Labor at the next federal election and did not rule out a preference deal with One Nation.
"People are angry around Australia," Mr Taylor told reporters in Sydney.
"They've had enough of this rotten Labor government that's taking this country in the wrong direction."
The prime minister said the coalition not ruling out a preference deal was a far cry from the Liberals in the 1990s, who put One Nation last when Senator Hanson first entered politics.
The shift among voters towards One Nation had been an issue "bubbling" along in Australian politics for the past three decades, Monash University head of politics Zareh Ghazarian said.
"What impact Labor policies will have on cost of living, on housing affordability is the best way it can respond, rather than political tactics," he told AAP.
"The two major parties have struggled with authenticity, we know One Nation is not as a polished political machine and are seen by some essentially as the champions of ordinary Australians."
The latest Newspoll, published in The Australian, showed a four-point rise in One Nation's primary vote to 31 per cent, pulling ahead of Labor, which dipped one point to 30 per cent.
Support for the coalition further declined, dropping two points to 18 per cent.
Nationals leader Matt Canavan said people felt like they were going backwards economically.
"What these polls show is that people are very frustrated and angry about their elected representatives not listening to them," he told Sky News.
"There are some very clear requests from people right now. People want migration to come down."
Trade Minister Don Farrell said One Nation's rise in support could be short lived.
"Populist parties in this country come and go. They rise and they fall. I don't think Labor has anything to fear from One Nation," he said.
"To the extent that anyone should be worried about One Nation, it should be the coalition."