Speaking at the conclusion of the regular African Mass in St Francis Xavier's Cathedral, Adelaide, on Sunday, he accused the Minister of acting on the basis of "stories he is hearing".
"In making his remarks the Minister has unwittingly but distressingly helped fuel the racism of some in our community," he said.
"The police say their experience does not back up the Minister's remarks that single out the Africans as notable for bad behaviour."
Mr Andrews has decided to reduce the proportion of African refugees being admitted into Australia from 70 per cent of the annual intake of refugees and asylum seekers, down to 30 per cent.
Addressing Sudanese members of the congregation, Bishop O'Kelly said that many, "especially the Sudanese, have been hurt by the words of Mr Andrews."
He added that the stories that formed the basis of the policy change focused on "bad social behaviour".
"Many of you here today feel insulted by these remarks because they do not apply to the great majority of the African newcomers, and you are hurt that no one seems to be speaking up for you."
He pointed out that Andrews' predecessor Senator Vanstone had said that Australia should be looking to the Sudan, rather than some parts of Asia, for people in the greatest need of resettlement.
"She spoke of the desperate plight of the Sudanese in Dafur and the misery of existence in the massive Kakuma refugee camp," he said.
"We know that the misery is still there, so there is no justification on that account to reduce the number of African people coming to Australia."
He stressed that it is wrong to give generalisations as the reasons for policy action.
"Stereotypes impose an unjust reputation.
"Why talk of the bad social behaviour of some (and it is true) and not describe and give thanks and recognition for [those] working hard at jobs and those studying at University in order to live the better life for which you came here and which will help you contribute even more to our Australian society."
Bishop says Minister's actions fuelled racism (Eureka Street Extra 8/10/07)