Plans to prevent schools from expelling transgender students have been taken off the table. 

Prime Minister Scott Morrison committed to striking down laws that allow schools to exclude staff and students on the basis of their sexuality, gender, relationship status or pregnancy, but Finance Minister Simon Birmingham the government now intends only to partially strike out the section to protect staff and students based on their sexual orientation.

That means laws that allow schools to exclude transgender students will be referred to the Australian Law Reform Commission for review.

“I understand the proposal that is put forward is to repeal the exemption as it relates to students being exempted from the sex discrimination act on the basis of their sexual orientation,” Mr Birmingham said.

“It doesn't go further than that.

“Those other matters as I understand it would still be subject to a relatively quick - within twelve months - review by the [ALRC] to try to address the best way to enact other changes without undermining certain issues around same-sex schools or other matters.”

Mr Birmingham says the government wants to protect students and staff based on sexual orientation, but it would require more work.

“This is not a proposal of the religious discrimination bill, it is an existing law put in place by the previous Labor government,” he said.

“We are now seeking to try to work through that, some parts of it have complexity around other related issues, but where there is at least a single simple step that can be taken, I hope that can be taken.”