Prime Minister Scott Morrison has suffered another blow to his policy agenda, with powerful religious leaders threatening to withdraw support for the government's religious discrimination bill unless greater freedoms are granted for Australians of faith.

In letter sent to Mr Morrison this week, a draft of which was seen by The Sydney Morning Herald and The Age, a coalition of religious groups says: "We take the view that it would be better to have no Religious Discrimination Act rather than a flawed one."

A powerful group of religious leaders has written to Prime Minister Scott Morrison, copying in Attorney-General Christian Porter, threatening to withdraw support for the religious discrimination bill. Credit:Alex Ellinghausen

The groups, which include the Catholic Archdiocese of Sydney, the Anglican Diocese of Sydney, the Executive Council of Australian Jewry, the Australian National Imams Council and the Greek Orthodox Church in Australia, say the bill in its current form will "diminish the religious freedom of faith groups in Australia".

The intervention, which could delay the bill's introduction to parliament until next year, follows a series of setbacks for the Morrison government in the second-last sitting week of 2019.