Students will sit trial NAPLAN tests using computers or iPads.
There are fears the roll-out of online NAPLAN testing may be delayed by funding cuts, despite trials of new features expected to improve the test's value.
Education ministers have set 2016 as a provisional date to scrap pencil and paper tests and move NAPLAN online. The shift is expected to lead to quicker turnaround of test results and a more detailed, accurate view of student performance.
The Abbott government is aiming for a 2016 start date, but the budget papers show funding has been scrapped for the program that has supported the development and trials of online NAPLAN tests – the online diagnostic tools initiative.
The $38.4 million in savings over four years will be redirected to general revenue.
This came on top of a $22.6 million funding cut to the agency which designs and administers the tests, the Australian Curriculum, Assessment and Reporting Authority (ACARA).
Fairfax Media understands ACARA will struggle to hold further online trials, which are needed before a full roll-out of online testing, without a funding boost.
A national roll-out will be a complex, expensive task complicated by a lack of computers and poor internet connections in some schools.
Greens schools spokeswoman Penny Wright said: ''NAPLAN online will produce much better information about a child's abilities and the results will get back to parents and teachers much faster.
''But with the funding for this program cut – almost $10 million a year – it's hard to see how ACARA is going to be able to meet the 2016 deadline.
''It's extremely disappointing the federal government is taking this much money from a program that would really help Australian students and putting it into general revenue.''
A spokesman for Education Minister Christopher Pyne said the funding cuts would not impact on the roll-out of online testing.
''Work being undertaken by ACARA in relation to online testing will not delay the introduction of NAPLAN online,''" the spokesman said.
''ACARA confirmed at the recent budget estimates that its funding reflects its own internal expectations, and that funding already committed will be used to undertake NAPLAN online related work.''
Mr Pyne has said a quicker turnaround of NAPLAN results - which can currently take four months to be made available - is a priority.
The latest trial of computerised NAPLAN testing, to be held from August, will include about 300 schools, 60 in Victoria.
A sample of students from about 30 schools will be given head phones to hear audio files of words they will then try to spell correctly. The tests may also feature animation, videos and other interactive components.
Students will sit the trial tests using computers or iPads connected to keyboards.
This year's trial will include ''branching'', a form of tailored testing that directs students to different sections during the test based on their performance on previous questions.
Struggling students would be encouraged to complete the test by providing questions that matched their ability while advanced students would be directed to tougher questions.
ACARA chief executive Robert Randall said: ''Online assessment offers benefits including potential for more accurate measurement of student achievement, and the ability to get information back to teachers and parents more quickly.
''Our research shows that a move to online testing will be beneficial to students with increased engagement and increased completion rates.''