Liam James Parry, 34, was arrested in March outside Queensland's parliament and charged with publicly reciting a prohibited expression  that might make a member of the public feel menaced, harassed or offended.
Parry allegedly said the phrase "from the river to the sea" during a student protest in support of Palestine.
Queensland has banned the phrases "from the river to the sea" and "globalise the intifada", categorising them as hate speech against Jewish people under new "fighting anti-Semitism" legislation.
The highly contested phrases are seen by some to advocate for the genocide of Jewish people from the Jordan River to the Mediterranean Sea.
Parry said it was "surreal and dangerous" that he was facing a potential sentence of two years' imprisonment while speaking to media after having his bail continued following a brief court appearance on Wednesday.
"I'm contesting these charges," he said.
"It's an important moment in Queensland right now. the government is trying to criminalise pro-Palestine advocacy. We can't accept that."
Parry said the presence of dozens of protesters was a sign people would not accept their civil liberties being taken away.
He denied he used phrases with anti-Semitic intent.
"I don't think there was anything hateful or menacing about my speech. My speech was about standing up for the people of Palestine."
As Parry entered Brisbane Magistrates Court on Wednesday for his first appearance, a pro-Palestine protester Mark Gillespie displayed a sign on his chest.
The sign read "from the sea to the river Palestine will live forever" as Mr Gillespie stood outside court.
Mr Gillespie was taken aside by police who were monitoring the protest and spoken to for a few minutes.
He told media he agreed to stop displaying the sign as the police told him he would be arrested otherwise.
Inside court, Parry sat at the bar table with his solicitor Ella Scoles, who sought to have the matter adjourned for three weeks.
Magistrate Louise Shepherd ordered the matter to return to court on April 29.
The police prosecutor did not oppose Parry being granted bail again.
Parry briefly addressed the crowd of protesters who had been chanting continuously outside court during his appearance.
"Thanks everybody for coming out. This is an ongoing matter. We need to keep speaking out for Palestine," Parry said.
He said the police's treatment of Mr Gillespie over his poster was "shocking".
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