The legislation, which passed by just five votes, was rushed through after Tuesday's budget to allow the money to be paid next school year.

The payments will be delivered to about one millions families, with $410 to go to parents of primary school-age children, and $820 to go to parents of high school-aged children.

The policy, which will cost an additional $2.1 billion over five years, will deliver cash in instalments in January and July each year, designed to be spent on books, uniforms and other school costs.

It replaces the education tax, which forced parents to keep receipts for items they had already bought, to claim the rebate.

Parents currently claiming the education tax will receive their full entitlement in June as a ''transitional arrangement''.

Coalition MPs bitterly opposed the scheme, with Nationals leader Barnaby Joyce telling the Senate the cash was ''completely and hopelessly an unadulterated bribe''.

Liberal Senator Michaelia Cash echoed Senator Joyce.

''The greatest political lie to ever be perpetrated on the Australian people is going to commence,''she said.

The scheme passed the lower house on Wednesday with the support of Greens MP Adam Bandt and the independents, including MP Bob Katter, who called for the bonus to be raised to $7000 per child to guarantee the survival of the Australian ''race''.

''If you want to have a nation and a people with a future and still exist as a race of people, you better do that and do that quick,'' Mr Katter said.

His spokeswoman later said Mr Katter did not mean to refer to race in a racial way, but was concerned about declining birth rates.