The High Court has ruled in favour of a Queensland father who challenged federal funding for the national schools chaplaincy program.
The challenge was launched by Ron Williams, who says there is no place in public schools for non-secular programs.
Attorney-General George Brandis is considering the decision on behalf of the government.
The federal government set aside $245.3 million in last month's budget to continue the program for another five years.
Under the program, 3700 schools are eligible for up to $72,000 funding to employ chaplains.
The government also revealed it would remove the option for schools to hire a non-religious welfare worker under the program.
In a unanimous decision, six judges on the High Court held that the federal government's agreement to fund the Scripture Union of Queensland to provide chaplaincy services to Queensland schools was unlawful.
Four of Mr Williams' children attend a Queensland school that receives federal funding for chaplains.
The case targets a law that allows funding of a wide range of programs that comprise up to 10 per cent of federal expenditure, including accommodation for asylum seekers offshore, the national counter-terrorism committee, ''Gallipoli-related activities'' and ''cybersafety''.
In 2012 Mr Williams won his first High Court battle against the chaplaincy program – which funds chaplains providing spiritual guidance in schools – when six of its seven judges ruled that it exceeded the Commonwealth's executive spending powers under the constitution.
The judges also said that the government could not spend money on programs that fall outside these powers without authority from Parliament.
This threatened federal funding for not only the chaplaincy program, but potentially hundreds of other programs that the government had similarly agreed to pay for without passing individual laws.
About a week later, the government amended a law to include 427 arrangements, grants and programs it could fund without legislation. In total they amounted to between 5 and 10 per cent of Commonwealth expenditure.
This second High Court case challenged the changed law, which the High Court has now held is invalid for the payment of the national school chaplaincy program.
The National School Chaplaincy Association will hold a press conference about the decision at 1pm on Thursday.
In a statement issued earlier this morning the association said the educational benefits of the chaplaincy program were ''widely recognised''.
The association's national spokesman, Peter James, said recent media reports that questioned the benefits of the program were ''scaremongering''.
''Spirituality is an important part of psychological wellbeing and developing successful educational outcomes,'' he said.
''Education is about free-thinking and helping students develop holistically, which includes exploring spirituality in a supportive, non-coercive and safe environment.''
smh.com.au with Benjamin Preiss