· In short: The government has received advice from an independent law reform adviser on how to prevent LGBT discrimination in schools.

· The government plans to legislate on that matter, and at the same time introduce legal protections for religious beliefs.

· What's next? The Coalition has been shown the government's plans and is considering its options, but details are not public.

An independent review into protecting LGBT staff and students at religious schools is now complete, but the government's own plans are no clearer.

In 2022, Attorney-General Mark Dreyfus asked the Australian Law Reform Commission (ALRC) to consider how best to prevent religious schools from discriminating against LGBT people in hiring and enrolment.

The government promised to do this at the last election, as a counterweight to its promise to introduce legal protections for religious beliefs.

Both ideas were tried by the Morrison government. The religious protections idea came first, to please conservatives unhappy with the passage of same-sex marriage. Protections for LGBT staff and students came second in a bid to gain broad support.

But Mr Morrison abandoned the exercise when several of his backbenchers revolted because they wanted transgender students to be included.

The Albanese government has promised to try again, with transgender students included. Today's final report from the ALRC is to inform that process, but the government is not bound to follow its advice.

And the ALRC dealt with only the LGBT discrimination-in-schools aspect, not the religious-discrimination aspect.

The government has formed its own plans, but so far in secret.

It has shown the legislation to the Coalition, and the prime minister has declined to publicise the bill unless he secures Coalition support.

"The government is seeking an enduring solution that strengthens protections for all of us," Mr Dreyfus said on Thursday. "For students. For teachers. For people of faith. And that's why bipartisan support for solutions is essential."

Shadow Attorney-General Michaelia Cash said the Coalition had been shown the government's legislation, but was unable to share it.

"We will consider it carefully and will continue to engage with stakeholders to understand how it affects them," she said.

Here's what the ALRC told the government about how to manage half of its reform plans.

How to retain religious schools but prevent LGBT discrimination?

The parameters the ALRC was set were as follows: religious schools should be able to operate in accordance with their beliefs, but must not discriminate against staff or students on the basis of sexuality or gender identity.

At present, religious schools can practice such discrimination. They have a special exemption to the Sex Discrimination Act that permits discrimination on the basis of sexuality, gender identity or marital status if doing so would "avoid injury" to the school's religious beliefs.

The ALRC says that exemption should be scrapped entirely.

That would mean schools could not discriminate in staff hiring or student enrolment. It would also mean they face similar duties to other organisations in how they treat LGBT staff or students.

For example, they could not limit a student's access to benefits other students enjoy, or subject them to any other "detriment". They would also likely have to accommodate uniform adaptations for transgender students.

Secondly, the ALRC recommended a new carve-out allowing religious schools to discriminate on the basis of religious beliefs.

This would go in the Fair Work Act and would apply to staff only.

Schools could discriminate in favour of staff who share the school's religious beliefs if doing so is "reasonably necessary to build or maintain a community of faith."

It envisages this would apply to religion teachers, but not necessarily to maths teachers or PE teachers, although there is some ambiguity about this and it would ultimately be up to courts to decide.

The ability to limit enrolments to students of one sex would be unchanged.

Diversity of views

At the root of this issue are deeply-held and divergent community views about discrimination and religion. The ALRC acknowledged this divergence, noting it received more than 40,000 public responses.

The ALRC said it had encountered resistance from some religious organisations, even though mostly they did not profess an active desire to discriminate.

"Religious educational institutions have no intention or desire to discriminate against students or staff … [but] some people were concerned that changes in the law might impact the ability of religious educational institutions to maintain their religious character, authenticity as a faith community … and their role as sheltered spaces from secular society."

But it said others, including people of faith, felt discrimination should be rooted out in all settings.

"Protection in the law was seen as providing certainty for community members by setting minimum expectations.

"Some challenged the idea that people can or should simply leave their communities of faith [because of their sexuality or gender identity] and noted that the right to freedom of religion or belief belongs to all people."

Mixed responses

Some faith groups attacked the ALRC report. The National Catholic Education Commission said it was "at odds with religious freedom and the high regard parents place in faith-based schools."

In a joint statement, three Christian schools associations called it "a direct attack on faith and freedom of belief in Australia," suggesting "Christian education as we know it will cease to exist" if the ALRC's suggestions were adopted.

President of the Islamic Schools Association of Australia, Abdullah Khan, agreed the recommendations were a "blatant attack on religious freedom and faith-based education."

"If implemented, these recommendations would fundamentally alter the landscape of Islamic education in Australia," he said.

But LGBT advocacy group Equality Australia welcomed the report. Chief executive Anna Brown said the recommendations were "balanced and sensible" and should be legislated immediately.

"Every day we delay these reforms there will be more students who are robbed of their chance to become a school prefect or take their partner to the formal, and there will be more teachers who are fired or told they are no longer fit for any promotions," she said.

Next steps

It's now up to the government to decide what to do with this suggestion. It's also up to the government to work out the other half of the equation: what a Religious Discrimination Act should look like.

Its plans on this are mostly opaque.

Faith groups have been told the government is interested in provisions to punish those who vilify others for their religious beliefs.

This was not in the Morrison government's bill and Christian groups have been reticent about it.

But those groups have recently shifted their position after discussions with Jewish and Islamic leaders about the rise in anti-Semitism and Islamophobia.

It is less clear that the Coalition would embrace anti-vilification laws.

On Sunday, Michaelia Cash warned against what she called an "anti-blasphemy law", an apparent reference to the fear that overly strong anti-vilification laws could impinge on free speech.

Speaking on Thursday after seeing the legislation, she said there appeared to be "substantial changes from [the Morrison bill] which will require careful scrutiny."