CES, which represents catholic schools in the Sandhurst Diocese, has said the bill in its current form needs to include protections for transgender and gender diverse children.

The bill indicates the Coalition's intention to provide legal protection against the discrimination of people of faith - including in employment and education.

Moderate Liberals and Labor MPs have argued further amendments to the Sex Discrimination Act (SDA) must be made before the religious bill is passed, following finance minister Simon Birmingham's confirmation on Tuesday that the proposed amendments to the SDA would only protect children based on their sexual orientation and not their gender identity.

CES executive director Paul Desmond said the current bill appeared to infringe on children's right to equality in education.

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"We acknowledge that there are two perspectives to the current legislations, one would be to protect the rights of each individual, and the other to tell organisations what they can and cannot do, so it's a very fine line," he said.

"I am reading that this bill does discriminate against (trans children), which concerns me, anything that violates human rights concerns me.

"I would be very concerned about any individual being denied their rights, and if that's in this bill then I'm not a supporter of this bill."

Mr Desmond said that even if the bill in its current form were to pass, CES would ensure the protection of all students.

"I would be insisting that principals counsel any teacher who would take action against a child because of their identity search," he said.

As a result of current conversations surrounding the bill, Mr Desmond said in a meeting on Tuesday night, the schools under CES were amalgamating the documents and programs they had in place for gender diverse children.

"We have programs about how to address the issues that young people face, the right language to use and the resources available in society," he said.

"We're educators, we want only what's best for the kids, I don't think the churches would be supporting any legislation that would deny a child their rights."

However, in a joint statement in November last year, faith leaders including the Australian Association of Christian Schools (AACS) expressed their support for the bill.

"We welcome this Bill because it will protect people of faith from discrimination on the basis of their religious beliefs, and will allow faith-based organisations to act in accordance with their doctrines, tenets and beliefs without this being disallowed as religious discrimination," they said.

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In a statement on Wednesday, the Australian Christian Lobby removed their support for the bill, arguing that amendments to SDA should not be made "hastily" by the government.

"If the ALP (SDA) amendments are passed, it is the position of the ACL that the Religious Discrimination Bill should be withdrawn by the government in its entirety," they said.

However, while Federal Nationals Member for the Victorian seat of Mallee and chair of the Parliamentary Joint Committee on Human Rights Dr Anne Webster said she would have preferred the SDA be amended first, she would support the bill regardless.

"I do think the SDA should have been amended before it was introduced to parliament," she said

"I think it would have gone down better if that had happened, there would have been less concern.

"I think there are some misunderstandings with the bill, however, I think we have got the balance (between the two bills) right so I'm hoping it goes through - that would be a really nice win."

The Mallee MP said the SDA would be reviewed by the Australian Law Reform Commission to potentially include an extension of discrimination protections for trans individuals within 12 months of the RDA being passed.

"I think to make further amendments we need to pass the RDA first," she said.

"There are so many complex voices in this, but we mustn't let the perfect get in the way of the good."

"While there are some who would like more to be done, there are certainly some who would like less to be done - but getting something done is better than paralysis."

But advocates and LGBTQA+ community members have slammed the bill, arguing the amendments don't go far enough.

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Non-binary writer and Castlemaine community advocate Jasper Peach said the bill was potentially triggering for young gender diverse people who were already 15 times more likely to attempt suicide.

"This bill is a pile of garbage - to put it kindly," Peach said.

"This conversation has once again sensationalised and thrown an already marginalised community under the bus.

"Having all of this in the media means these children will be under further scrutiny - having a huge impact on their mental health."

Peach echoed the sentiments of several parliamentarians this week, arguing the bill was a diversion from the governments failings during the pandemic.

"The Prime Minister is trying to withdraw focus from what's actually going on in this country, which is that he's made mistake after mistake," they said.

Peach said the bill would mean schools would fail to be a safe place for students.

"The world feels so small when you're a small kid," they said.

"And if you're in an environment where your identity is not affirmed and is instead demonised, there are massive consequences."

Stephen Jones MP spoke in parliament on Tuesday about the ramifications of discrimination for trans and gender diverse young people, paying tribute to his 15-year-old nephew Ollie, who took his own life earlier this year.

"He was gay, he was uncertain about his gender ... but now he's gone and we're no longer able to love and support him on his journey through life," he said.

"It's about all of our kids, about the families of those kids, every child who's had the courage to swim against the tide, just to be who they are."

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