Leading "No" campaigner and religious conservative Lyle Shelton says schools should not have the right to expel students simply for being gay - but should be able to do so if a student acts on that impulse by having sex.

The federal government's long-awaited review of religious freedom - which has been obtained by Fairfax Media - has put the spotlight on exemptions to anti-discrimination law enjoyed by religious schools and other bodies.

Prime Minister Scott Morrison says he will respond to the Ruddock review by year's end. Credit: Supplied

Former attorney-general Philip Ruddock's review panel recommended enshrining in federal law the ability for religious schools to reject gay students under certain conditions. Currently, it is unlawful for schools to reject gay students, but religious schools are exempt from that law.

On Wednesday, Mr Ruddock and the government characterised the recommendation as limiting the circumstances in which religious schools can discriminate - by forcing them to have clear and publicly-available written policies if they wished to do so.