Axing religious instruction from the Victorian curriculum could drive students away from state schools and into the non-government system, religious providers have warned.

The state government's announcement on Friday that special religious instruction would be moved out of regular class times from 2016 was warmly welcomed by the Australian Education Union and many public education advocates, who have long argued that the current arrangement was at odds with a secular public school system.

But chaplaincy organisation Access Ministries, the main provider of religious instruction, said the decision had eroded "equality and opportunity".

Access Ministries spokesman Rob Ward said state school parents who could not afford, or chose not to send their children to faith-based schools would suffer.