Under current law, faith-based organisations, including schools and hospitals, can refuse to hire those they view as sinners if they consider it ''is necessary to avoid injury to the religious sensitivities of adherents of that religion''.

Ms Gillard has met Australian Christian Lobby managing director Jim Wallace several times, and he says she assured him ''she has no intention of restricting freedom of religion'' when it comes to religious groups' legal rights to discriminate in hiring and firing.

The Prime Minister said through a spokesman: "We don't comment on discussions with stakeholders.''

Discrimination by religious organisations affects thousands of Australians. The faiths are big employers, and the Catholic Church in particular is one of Australia's largest private employers.

They rely on government funding but because of their religious status are allowed to vet the sexual practices of potential employees in ways that would be illegal for non-religious organisations.

Labor often claims to represent progressive values and is led by an atheist, but the government has gone out of its way to placate religious organisations on this issue.

The woman who will be steering the Human Rights and Anti-Discrimination Bill through the Senate, Finance Minister Penny Wong, is a committed Christian and a lesbian.

Senator Wong said this week that Labor was ''seeking to balance the existing law and the practice of religious exemptions with the principle of non-discrimination''.

It is believed that senior Labor ministers have been making similar promises to the Christian lobby since Kevin Rudd was prime minister.

Before she was elected in 2010, Ms Gillard promised Mr Wallace in a filmed interview that she would protect the school chaplains program and that under her government ''marriage will be defined as it is in our current Marriage Act as between a man and a woman''.

She said that ''we do not want to see the development of ceremonies that mimic marriage ceremonies''.

The Australian Catholic Bishops Conference is adamant that the church should retain its rights to discriminate, but Anglicans are divided.

The more conservative Sydney diocese claims its right to discriminate against gays and lesbians and others whose ''lifestyles'' offend religious beliefs, Bishop Robert Forsyth of South Sydney said.

But social welfare charity Anglicare practises the opposite, South Australian branch chief executive, the Reverend Peter Sandeman said.

''Jesus didn't discriminate in who he associated with and helped and neither should we,'' Mr Sandeman said. "At Anglicare South Australia, we introduced a formal policy welcoming and supporting inclusion and diversity nearly a decade ago.''

Jews ''don't have a position on this'', Executive Council of Australian Jewry executive director Peter Wertheim said.

The Australian Federation of Islamic Councils did not respond to questions.

Labor's Human Rights and Anti-Discrimination Bill was an attempt to consolidate the law, ''not completely re-invent the anti-discrimination system'', a spokeswoman for Attorney-General Nicola Roxon said.

''We are proud to be introducing important new protections from sexual orientation discrimination. While there are some exemptions, this doesn't detract from these important changes''.

smh.com.au