Principals and politicians came out strongly against a leaked recommendation of Phillip Ruddock's review of religious freedoms that would enshrine the right of religious schools to turn away gay students and teachers in Commonwealth law.

The ACT is one of the states and territories that already exempts religious educational institutions from discrimination laws.

Chief Minister Andrew Barr said the religious exemptions were not intended to "licence students being kicked out of school because of their sexuality" and he was not aware of any cases where the legislation had been used in that way.

“Discrimination on the basis of someone’s sexuality is wrong – whether it happens at school, work or anywhere else. The ACT has recognised freedom from discrimination as a fundamental right within our Human Rights Act for more than a decade. This is the clear intent of the government," Mr Barr said.

"However, we are reviewing the legislation and if there is any possibility of a loophole of interpretation of the Act that would allow this kind of discrimination, the government will quickly move to close it.”

ACT Discrimination Commissioner Karen Toohey said the Ruddock proposal would "render pointless the ACT's current review of discrimination laws.

"We know the significant effects discrimination and exclusion have on people’s health and well being and prioritising the rights of religious organisations to discriminate over people’s right to identity, inclusion and to fair and equal treatment is a backward step," Ms Toohey said.

Ms Toohey said while the exemption existed in Canberra, "in our experience schools rarely rely on these provisions to exclude students recognising the devastating impact this has on a child or young person".

Justice Minister Shane Rattenbury said the ACT had a "strong anti-discrimination and human rights framework" although it was unclear how the changes recommended to the federal government would interact the ACT’s anti-discrimination and human rights laws.

“We will be seeking further clarity from the federal government, should they wish to pursue this anti-discriminatory practice," Mr Rattenbury said.

“Our interpretation of these [ACT] provisions is that they don’t permit schools to refuse to admit LGBTIQ students. We do not believe they have been used in this way. If it becomes clear that any gaps in the Act exist, we will amend this to make it absolutely clear that discrimination of this kind is not acceptable in the ACT.”

Monash University associate law professor Dr Luke Beck said regardless of the Ruddock proposal, the ACT should move to repeal the exemption.

"The ACT Chief Minister has said he doesn't support religious schools discriminating against gay students. If that's genuinely his belief I look forward to him introducing legislation to repeal this exemption in the ACT Discrimination Act," Dr Beck said.

"There's no reason why the ACT and other jurisdictions can't act now. It's ACT law and the ACT legislature has the power to amend ACT law today."

Dr Beck schools who say they would never use the exemption should also support the abolition.

"What is the point of having the right to discriminate when they say would never want to do such a thing," Dr Beck said.

Archdiocese Canberra and Goulburn Catholic Education director Ross Fox said ACT Catholic schools reflected the Canberra community, and were diverse and inclusive.

"It is a long standing and accepted international human right for parents to choose the best education for their children that accords with their faith and beliefs," Mr Fox said.

"If this context needs further refinement we will work with the community and government to ensure that ACT students and families continue to be well served by Catholic schools."