The federal government has threatened to withhold billions of dollars of funding earmarked for Australian public and private schools next year if states refuse to sign up to its new education funding deal.

The federal government has threatened to withhold funding for schools if states don't sign up to its new education funding deal Credit:Michele Mossop

In a strongly-worded letter sent to every Australian education minister, federal Education Minister Dan Tehan said states would have to foot the bill for a massive shortfall in private school funding if an agreement wasn't reached by December 7.

"Should a bilateral agreement not be in place by this date, the Commonwealth will be unable to make the first 2019 payment to the relevant state or territory, including with respect to non-government schools," Mr Tehan said in a letter sent to Victorian Education Minister James Merlino on Wednesday.

"In these circumstances, I would seek your assurance that the Victorian government would make up any shortfall experienced by the non-government sector to ensure that schools do not face undue financial stress."