The rise of faith-based schools in Australia is restricting the ability of some students to relate to people of diverse backgrounds, a university sociologist has warned.

University of Technology Sydney professor Andrew Jakubowicz says that while public schools have traditionally had a crucial role in allowing students of broad backgrounds to "operate quite comfortably in different cultural environments", the proliferation of ethno-religious schools - largely because of federal government funding policies - has had social consequences.

"There is little doubt that the Howard government strategy (continued by the Rudd Government) of directing federal funds to private schools suits the idea of the market and the ideology of choice," says Professor Jakubowicz, co-director of the Cosmopolitan Civil Societies Research Centre, in a discussion paper to be released today.

"However, it may significantly undermine three key struts in the whole edifice of social cohesion and modern citizenship - namely intercultural competence, secularism as a core social value and interactive life-long learning."

In recent years, increased public funding to non-government schools has led to a sharp rise in the number of students attending private schools. Today, almost 40 per cent of students in Australia are enrolled in faith-based schools, including those of the Irish Catholic tradition, Greek Orthodox, Jewish and Islamic schools.