Labor is claiming victory from Malcolm Turnbull's "humiliating admission" on school funding, as the prime minister moves to douse damaging tensions with Catholic schools.
The Catholic school sector campaigned against the government's funding policy in the Queensland seat of Longman, where the coalition suffered a bruising by-election defeat.
A deal to restore $1.7 billion in funding to Catholic schools over the next decade is expected to be reached within weeks after the prime minister seized control of the issue, The Australian reports.
Catholic Education bosses met with Education Minister Simon Birmingham on Tuesday but it's understood nothing concrete has been offered.
Labor leader Bill Shorten said Mr Turnbull had spent the last 12 months calling Mr Shorten a liar and saying there was no problem for Catholic schools.
"Now he's received an electoral smack on the bottom over his cuts to school funding, he's now going to sing a different song," Mr Shorten told reporters on Tuesday.
The opposition say cuts in the wider education sector amount to $17 billion and must be reversed.
"Malcolm Turnbull has been forced into a humiliating admission that his school funding policy is in crisis," the party's education spokeswoman Tanya Plibersek said.
Liberal Senator Jim Molan was matter of fact on the situation.
"We've got to be prepared to be taken to task by the Catholics; we shouldn't get ourselves into the situation where we're taken to task by the Catholics," he told 2GB.
But cabinet minister Steve Ciobo maintained the government line that they're putting record funding into schools as part of a shift to a needs-based funding model.
The Australian Education Union maintains a special funding deal for Catholic schools will be categorical proof of the failure of the latest education funding model.
Federal president Correna Haythorpe has called for $1.9 billion to be restored for public education over the next two years before any deal is done with Catholic schools.
"The commonwealth should strike a deal with states and territories to ensure that all public schools receive 100 per cent of their schooling resource standard by 2023," she said, saying just 13 per cent of schools were expected to.
Meanwhile modelling commissioned by the Catholic sector found 350 schools would be forced to close across Australia if the current funding model was continued.
"You don't have to be Nostradamus to work out that is going to lead to electoral difficulty, indeed pain, were that allowed to continue along that route," Liberal MP Tony Pasin said.
