The New South Wales Department of Education has expelled a Chinese Government language program from the state's public schools due to fears of potential foreign influence.

Key points: The NSW Department of Education ordered the review after concerns of potential propaganda in Australian schools

The NSW Department of Education ordered the review after concerns of potential propaganda in Australian schools The review said the arrangement placed Chinese Government appointees inside a NSW Government department

The review said the arrangement placed Chinese Government appointees inside a NSW Government department The State Government said it would replace the program with Mandarin classes run by the Department of Education

The Confucius Institute program is overseen by Chinese Government agency Hanban and teaches Mandarin in 13 public schools across Sydney and on the mid-north coast.

Following concerns of potential propaganda in Australian schools, the NSW Department of Education ordered a review last May.

Handing down its report, the department said the review found no evidence of "actual political influence".

But it said there was a perception that "the Institute is or could be facilitating inappropriate foreign influence, and that NSW is the only government department in the world hosting a Confucius institute".

"Having foreign government appointees based in a government department is one thing," the review concluded.

"Having appointees of a one-party state that exercises censorship in its own country working in a government department in a democratic system is another."

Confucius Institute provides learning materials to the Confucius Classroom program across Australia. ( YouTube: NSW Department of Education - Learning Systems )

NSW was the first government body in the world to host an institute within its own Department of Education in 2011 — deviating from the usual process where institutes are set up in universities.

NSW Department of Education Secretary Mark Scott said there would be a six-month transition period, with the arrangement ending at the end of the year.

"The review found the Confucius Institute program arrangement with the NSW Department of Education is unique and the program is better placed with a higher education provider," Mr Scott said.

Mr Scott said the department had accepted all the review recommendations and work has begun to implement them.

NSW Greens MP David Shoebridge said the report was "extraordinarily damning" and commended the clear language used by the review's authors.

"I am glad to see the department is cancelling this arrangement, it is unfortunate they can't cancel it immediately because the secret agreement they entered into has a six-month termination clause," Mr Shoebridge said.

"But this is an agreement that should never have been signed by the Coalition Government.

"They were so desperate for cash, and in this case very small amounts of money, they were literally willing to sell out the sovereignty of the State Government."

In July, the ABC reported teaching assistants were being vetted by the Chinese Government for "good political quality" and a love of "the motherland".

The State Government cut the contract ahead of the review's release and said it would replace it with Mandarin classes run by the Department of Education.

"Confucius Institute students make up 15 per cent of Chinese language students in NSW public schools, and there will be a $1.2 million program to continue teaching Chinese language and cultural programs," Mr Scott said.

A Confucius Institute volunteer teacher running a class in a NSW public primary school. ( YouTube: NSW Department of Education - Learning Systems )

NSW Education Minister Sarah Mitchell said she supported the department's decision to end the Confucius Institute program.

"Whilst the department's review concluded there was no evidence of any undue influence in the Confucius classrooms, there were clearly inappropriate governance arrangements in place," Ms Mitchell said.

Australia has the third-highest number of Confucius institutes and classrooms in the world — behind the USA and the UK — with 14 institutes and 67 classrooms across the country.