An amendment to the Anti-Discrimination Act has given faith-based schools the right to reject students whose families do not share their faith.
Attorney-General, Dr Vanessa Goodwin, said the amendment would bring Tasmanian schools into line with other states.
"The Anti-Discrimination Amendment Bill will allow faith-based schools to give preference in their admissions to students who have religious beliefs, affiliations or activities consistent with those of the school," Goodwin said.
Independent Schools Tasmania (IST) had been pushing for the exemption.
IST chief executive, Tony Crehan, said under the current arrangements principals could only turn away students on the basis of faith, but only if the class was full.
"The schools were founded and built at the cost of school communities and very often that was a church-based community," Crehan said.
"Having been built for that purpose, that's the reason why they should be allowed to have this exemption to the anti-discrimination rules."
Exemptions for religious schools to the Anti-Discrimination Act have been also been controversial in other states, with the Independent Education Union in NSW labelling the matter a “human right’s issue”.
“We just don’t see that there should be a blanket opportunity for discrimination in this day and age,” IEU assistant secretary, Pam Smith, told The Educator.
“These are human rights issues.”
Other human rights activists have also slammed the decision.
The Tasmanian Gay and Lesbian Rights Group (TGLRG) labelled the Amendment Bill a "bigot's charter" which handed religious schools special rights.
Rodney Croome, the group’s spokesman, claims the new law would give religious school principals “free rein to discriminate” against gay and transgender students.
"This is a bigot's charter because it will give religious school principals free rein to discriminate against gay and transgender students and the children of same-sex couples under the guise of their school's religious beliefs," Croome said.
Crehan rejected the suggestion that the exemption would be used to exclude children based on sexuality.
"I don't think there's going to be massive turning away of students, it's certainly not led by bigotry," Crehan said.
"It's on the basis of religion, not sex or sexual preference."