The Turnbull government is willing to ditch its controversial plan to link school funding increases to inflation - slammed by Labor as a $30 billion cut to school funding - according to leaked government talking points.

In the 2014 budget, the Coalition announced plans to peg school funding to the Consumer Price Index (CPI) and enrolments from 2018, a change estimated to save around $30 billion over the next decade. The shift, coupled with similar changes to hospital funding, infuriated state premiers and helped spark a national debate on lifting the GST to help pay for rising health and education costs.

Watering down the plan by leaving current indexation arrangements in place or moving to a new measure linked to school costs would further hamper the government's bid to return the budget to surplus.