Christian leaders have warned that religious freedoms in Australia are under increasing threat after the release of the Australian Law Reform Commission's (ALRC) highly anticipated report on faith-based schools on Thursday.

The subject of widespread public commentary in the weeks leading up to its release, the report included the ALRC's expected recommendation to the Federal Government that the Sex Discrimination Act be amended to remove exemptions for faith-based schools from laws making it illegal to expel or fire LGBTI+ students and staff based on their sexual orientation or gender identity.

While LGBTQI+ groups have urged the government to implement the ALRC's recommendations, the report has been condemned by faith groups as another example of the erosion of religious freedoms.

A coalition of more than twenty Christian, Muslim, and Jewish organisations sent a letter to Prime Minister Anthony Albanese late last week urging him to reject the report's recommendations, writing that removing the exemptions would "prevent the overwhelming majority of faith-based schools from preferring persons who share and authentically live out their faith" and potentially "extinguish their distinct and authentic character".

The Australian Christian Schools Alliance (AACS) called the report "a direct attack on faith and freedom of belief in Australia" and warned that adopting the recommendations would mean that "Christian education as we know it will cease to exist".

Labelling it "a line in the sand moment not just for Christian schools, but for all people of faith and for the principle of religious freedom across Australia", AACS Executive Officer Vanessa Chen said, "If these ALRC recommendations are adopted, it means the government can tell Christian schools who we can employ, what we can believe and teach."

"It sets a scary precedent, and the question Australians need to ask is 'who's next'? Will they dictate to any other religious group or organisation what they can believe?"

Saying that the issue was not about discrimination, Ms Chen said it was about the right of parents to choose a school that was aligned with their values and beliefs.

Polling released by the AACS in the fortnight leading up to the report's release showed that an overwhelming majority of Australians think schools should be able to employ teachers and other staff who support the clearly stated values and values of the institution, with a Compass Polling survey of 1,713 adults finding that 80% of respondents believed that schools should be able to hire and fire teachers based on their religious belief and behaviour.

However, the Federal Government is under growing pressure from lobby groups to fulfil its pre-election promise to remove the exemptions and implement a separate religious discrimination bill. The issue of religious freedom has also increasingly become a hot-button topic in the culture wars after the previous Coalition government failed to pass proposed legislation that would have enshrined protections for religious belief and expression. Concerns have only been exacerbated by recent moves to pass new laws around misinformation and hate speech that religious groups say threaten the place of faith in society.

In an opinion piece published in The Australian, a major national newspaper, Catholic Archbishop of Sydney, Anthony Fisher, warned that the report was the latest sign that the ability of Australians to "gather, speak freely, pray together and undertake works of service for others" was being reduced "slice by slice", and called political leaders to come together to protect religious freedoms.

Prime Minister Anthony Albanese sought to defuse attacks from both sides of the debate, announcing that he would only proceed with any amendments to the Act if Labor received bipartisan support from the Federal Opposition.

''I think Australians don't want to see the culture wars and the division out there. I want this to be an opportunity for unity going forward, and that's why we've provided the legislation to the opposition,'' Mr Albanese said.

However, both the Coalition and minor parties rejected trying to bypass normal procedures or debate over the laws.

''With the Greens and independents, there is a solid progressive majority in parliament to get this done now and it is a tragedy to watch Labor throw this chance away," David Shoebridge, justice spokesman for the Australian Greens, said.

"We can stop students being discriminated against because they are queer or trans.''

Deputy Opposition Leader Sussan Ley said that the legislation would need to progress through parliament like any other legislation, including facing the scrutiny of a Senate committee if needed.

''Concerns have been raised by the Christian, Catholic, and Islamic schools and they should be addressed,'' Miss Ley said.