Labor has broken away from working with the federal government to protect gay students in religious schools, arguing the coalition is dragging its feet and the matter must be resolved.

The major parties had been working together to remove exemptions in the Sex Discrimination Act that allow faith-based schools to discriminate against LGBTI students.

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But negotiations have broken down over the government's insistence new provisions be introduced that would allow religious schools to enforce rules such as compelling gay students to attend church services.

The government promised to remove exemptions relating to gay students by the end of the year, but has not yet done so.

With less than two sitting weeks left before the long summer break, shadow attorney-general Mark Dreyfus says it's time to resolve the issue once and for all.

Mr Dreyfus is preparing to introduce a private member's bill to bring the issue to a head.

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"Given the government's refusal to proceed with a simple removal of the relevant exemptions, Labor will seek to do it for them," he said on Tuesday.

"There is support across the parliament on this issue. There is no reason why it cannot be progressed and resolution achieved over the next two weeks."

Religious schools have overwhelmingly indicated they do not want or need the power to discriminate against gay students.

It is likely Labor's private member's bill will act as a political wedge, forcing the government to introduce its own legislation to parliament in the next few days.

Attorney-General Christian Porter said the protections proposed by the coalition to uphold school rules were "modest" and necessary.

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"We think that's a very reasonable protection for religious schools and they consider that is very important to the way in which they conduct their affairs," he told ABC radio.

Mr Dreyfus disagrees.

"Labor does not believe that additional measures that expand the grounds for indirect discrimination for religious schools, as proposed by the government, are necessary," he said.

Mr Dreyfus says Labor remains committed to removing exemptions aimed at gay staff in religious schools, but argues the issue is far more complex and requires further consideration.

The issues around gay students and teachers in faith-based schools came to light through the Phillip Ruddock review into religious freedoms in Australia.

Mr Porter said the government was in the final stages of deliberating over the review and would publicly release it very soon.