This is despite coming under intense fire from public education groups in recent weeks for allowing another private school to move into a former government school building in Belconnen.

This means two new non-government schools will operate in north Belconnen from next year, potentially threatening the enrolment base of existing government schools in the area.

Ms Burch said this week she had given the Islamic school permission to use the Spence site for 12 to 18 months when it opens a second campus next year.

At the weekend's ACT Labor conference Ms Burch faced a motion over her handling of non-government school registrations after months of criticism by major public education groups - the Australian Education Union, ACT Council of Parents and Citizens Associations and Save Our Schools.

They have condemned a number of aspects of three recent non-government school approvals including allowing the Brindabella Christian College to establish a second campus in the old Charnwood high school next year.

Now Ms Burch faces a new round of condemnation over the At-Taqwa Islamic School decision when her preference during the original approval process was for the school to operate in Gungahlin on a purpose-built site.

The ACT Labor Party platform contains the policy to ''ensure that available space in ACT schools will be used to the benefit of their students and of community organisations, and will not be used to house non-government schools in government school buildings''.

Save Our Schools convener Trevor Cobbold said the approval for the At-Taqwa school should be suspended until it could secure a site in Gungahlin.

And the Australian Education Union and ACT Council of Parents and Citizens Associations both said the decision illustrated the need for significant reform of the legislation governing non-government school approval in the ACT.

A review of administrative and legislative processes is under way.

Osman Adam, the president of Canberra Muslim Youth, wrote to Ms Burch last month asking to allow the new school to be located temporarily in Spence - using demountable classrooms - because the school had been unable to secure land in Gungahlin and needed to set up for new enrolments next year.

He said the school had a tenancy at the Spence site, alongside other community groups, where it offered Sunday school and a midweek adult language and a Koran class.

Ms Burch's office said the Territory and Municipal Services had approved the tenancy extension.

But Mr Cobbold said the approval showed how flawed the original decision was.

''Approval for the school was given before its location was known so that the implications for existing schools in the area have not been properly assessed … and may impact on the viability of existing schools,'' he said.