The Turnbull government is set to put the breaks on federal money flowing into "over-funded" private schools in a new deal to take effect next year.

The move would free up funds to distribute to needy public and non-goverment schools.

Melbourne Grammar is one of Australia's most "overfunded" private schools. Credit:Chris Hopkins

The move comes as new Education Department data shows the glacial speed at which schools are currently moving towards their appropriate funding level – a process Education Minister Simon Birmingham wants to speed up.

Fairfax Media understands Senator Birmingham's school funding proposals have been discussed in detail during cabinet meetings over recent months, but a final position to present to state governments and the Parliament has not been approved.