Hawzah News Agency - The incident took place on a 185 bus from Wynyard station in the city's CBD to Mona Vale on the Northern Beaches in Australia last Saturday afternoon.
Video submitted to the Islamophobic Register Australia showed the seated woman saying: "Everyone who is Muslim has a chance to be radicalized" before a fellow passenger sitting nearby tells her that they are Muslims.
The bus driver then tells the woman making the anti-Islamic rant: "Could you please get off my bus, or I will get the police now."
She protests that she is doing no wrong before starting to walk off the bus. The woman can then be seen slapping the driver as she makes her exit, 9news reported.
From its side, New South Wales (NSW) Police Force spokesman said officers are investigating the incident and have appealed for witnesses to come forward.
A spokeswoman for the Islamophobia Register Australia said the organization is experiencing a rise in numbers and increased severity of reported incidents.