Australia's largest Islamic school could find out today whether the Federal Court will force the Department of Education to make an interim payment to the school, as it tries to keep its doors open.

Earlier this year, Federal Education Minister Simon Birmingham revoked $19 million in funding after finding the Malek Fahd Islamic School in Greenacre, in Sydney's south-west, had failed to comply with financial standards.

There was a temporary reprieve in April when the Administrative Appeals Tribunal issued a stay against the revocation pending further court cases.

Despite that stay, the school is yet to receive any federal funding.

In the Federal Court today, Justice Steven Rares said the issue came down to whether the Minister had the discretion to deny the temporary payment of $5 million to the school.

The department last month said it was still assessing whether the school had met financial requirements, particularly that it would use the funds for school education purposes alone.

Counsel representing the Department of Education Stephen Free argued an injunction that compelled the Minister to make the payment would effectively stop him from exercising his discretion under the Australian Education Act, 2013 (the Act).

"An order of that kind especially if ordering immediate payment would impact on the Minister's powers," Mr Free said.

Barrister Ian Coleman SC, representing Malek Fahd, told the court the school would run out of funds by the end of the week and students would be impacted.

"We are in your honour's hands," he said.

"There are 2,400 young Australians, 200 Australian teachers, the Year 12 students and the impact on the broader community having to find places for all the students."

Justice Steven Rares earlier adjourned the court while he considered his decision.