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Exiled Tibetan spiritual leader remains calm despite loud protest outside school where he was preaching

The protesters have followed the Dalai Lama since he arrived in Australia last week, calling for the exiled Tibetan to stop the persecution of minority Shugden Buddhists

He asked Australians to contribute to a more peaceful world order for the next generation

Exiled Tibetan spiritual leader, Dalai Lama, received applause and inspired awe with his teachings on compassion and forgiveness at a NSW school, outside he was being denounced and called a liar.

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The popular monk visited the Blue Mountains on Monday, where he asked Australians to contribute to a more peaceful world order for the next generation.

Daily Mail reports that about 3500 people packed the Katoomba Public School grounds for over two hours to listen to the monk's teachings.

Blue Mountains mayor Mark Greenhill introduced the 79-year-old, who joked with the other on-stage guest, fashion designer Jenny Kee, before placing white scarves around the necks of young choir members.

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But reports say the Dalai Lama could not escape the sounds of protesters on a street corner outside the school.

'I appreciate ... freedom of speech,' he quipped to the laughter of audience members.

The protesters have followed the Dalai Lama since he arrived in Australia last week, calling for the exiled Tibetan to stop the persecution of minority Shugden Buddhists.

The Dalai Lama urged Australians to realise 'inner values', including love and compassion, regardless of religious affiliation.

He echoed an Indian understanding of 'secular' as respect for all religions, but conceded religion often became an instrument for trouble.

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'Religion is supposed to bring inner peace ... harmony, but that very factor becomes source of problem,' said the Dalai Lama, who had actor Richard Gere among his attendees at a wisdom retreat in the Blue Mountains.

'Why? I think lack of conviction.'

During a question and answer session, he was asked for advice from a woman with an angry husband and from a father whose daughter suffers anxiety.

He was also asked how society can forgive those committing atrocities like the Islamic State.

Outside, protesters from the International Shugden Community chanted for the spiritual leader to 'stop lying', claiming Shugden Buddhists were being mistreated after the Dalai Lama banned them from worshipping the fierce spirit known as Dolgyal (Shugden).

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'They practise the same teachings that the Dalai Lama's teacher taught him, but then for some reason the Dalai Lama changed his mind and he has created the atmosphere of religious hatred against these people,' spokesman Nicholas Pitts told AAP.

The Dalai Lama will travel to Brisbane, Perth and Uluru as part of his Australian tour.

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