Priests’ training at private colleges would reportedly be subsidised by the Federal Government for the first time under Prime Minister Tony Abbott’s proposed higher education reforms.

The government’s proposed higher education package - under which universities will have their fees deregulated and funding cut by 20 percent - extends federal funding to students at private universities, TAFES and associate degree programs, The Sydney Morning Herald reports.

Religious teaching, training and vocational institutes, such as such as the Sydney College of Divinity, Brisbane's Christian Heritage College and the Perth Bible College, would have a share of $820 million in new funding.

The institutes charge students full fees but would be eligible for an estimated $4214 funding a year each student under the reforms.

The move comes after the government’s controversial decision to provide $244 million for a new school chaplaincy scheme.

Labor higher education spokesman Kim Carr has slammed the proposed reforms.

"This raises serious questions about relationship between Church and State. The Church has traditionally funded the training of its own personnel," Mr Carr said.

Greens higher education spokeswoman Lee Rhiannon said: "Mr Pyne has gone one step further than robbing Peter to pay Paul – he is attempting to rob Australia's public and secular university system to pay private, religious colleges.

"Courses that Mr Pyne wants to extend funding to include those teaching prescriptive Christian ideology on sexuality and marriage – is this really the best use of the higher education budget?"

A spokesman for Education Minister Christopher Pyne said all federal funding would require approval by an independent regulator.

"Consistent with current practice, the government will not distinguish between faith based and secular higher education institutions for registration and funding purposes," the spokesman said.

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