Media outlets that broadcast or publish phrases such as ''loony'', ''psycho'' and ''nutcase'' would be censured under a plan to crack down on language that stigmatises the mentally ill.
Headspace, the national youth mental health foundation, wants TV, radio and print regulators to penalise those who use mental illness as a derogatory term.
In a letter to regulatory authorities obtained by The Sun-Herald, the Headspace chief executive, Chris Tanti, said that while it is no longer considered appropriate to use the words ''retarded'' or ''gay'' as pejorative terms, it is still deemed acceptable to accuse public figures of being ''nuts'', ''bonkers'' or ''crazy''.
The chairman of the Australian Press Council, Julian Disney, has responded to the concerns, saying they are ''important and persuasive'' and would be given the ''highest possible priority'' in press standards presently under revision.
Mr Tanti said gratuitous use of demeaning language around mental illness made it more difficult for young people battling conditions such as anxiety and depression.
''This [makes] it more likely for friends and family members to talk about a terrible decision as being 'insane' or an unpopular teacher as being a 'whacko'. Other terms such as 'nutcase', 'nutjob', 'psycho', 'insane', 'loony' and 'mad' can cause real damage … These instances increase the stigma around mental illness, making it less likely a young person will seek help,'' he wrote.
Guidelines around discriminatory language vary between media outlets, with some codes of practice categorising mental illness under the general banner of disability while others make no mention of it at all.
Mr Tanti said it needed to be addressed separately as many people with a mental illness were high-functioning, could hold down jobs and did not consider themselves disabled.
While stressing that Headspace was not seeking a ban on specific words, he said gratuitous and unnecessary mental health-related language should not be tolerated.
''We've taken words like 'sheila' and 'poofter' and 'wog' out of everyday use but this is something that continues,'' he told The Sun-Herald. ''The common use of schizophrenia in the media is completely wrong. They often refer to it as someone who's in two minds, whereas the illness is a completely different thing. I wonder what the person who experiences these problems thinks when they hear this sort of language going unchecked? It's hurtful and it's completely unnecessary.''
Mr Tanti said Commercial Radio Australia's approach to mental illness was the most commendable, with guidelines stating terms such as ''nutcase'', ''psycho'' and ''lunatic asylum'' should be avoided as they may perpetuate discrimination against the mentally ill.
However, he said the stipulation should be moved from the guidelines to the enforceable code of practice, meaning sanctions for breaches - a move Headspace would like all media outlets to adopt.
The ABC's code takes a generalist approach to avoiding discrimination but a spokeswoman said the managing director, Mark Scott, would respond to Headspace in writing. ''The ABC are very aware of the issues the letter mentions and are fully engaged, both internally and externally, with matters relating to the reporting of mental illness,'' she said.
Mr Disney said the Press Council had identified mental health as a priority in the Specific Standards of Practice released last year, which included standards on the reporting of suicide.
''Those standards, and the ones we are currently preparing in relation to access to patients in institutions such as hospitals and nursing homes, are obviously relevant to the circumstances of people with mental illness. But we have recognised the need to focus specifically in that area, including in relation to the issues raised by Headspace,'' he said.
The Beyondblue chief executive, Kate Carnell, was largely supportive of Headspace's stance but maintained it was important not to become the ''word police''.
''You can end up having a debate about whether you should call a cartoon channel Looney Tunes or not and that would just not be a productive debate,'' Ms Carnell said. ''The emphasis should be more on the portrayal of people who have a mental health issue. Often people who are behaving antisocially are portrayed as having a mental health issue … What that's done has produced a scenario where more people now, according to research, believe that people with mental health issues are dangerous. That's the thing we're most worried about.''