The federal government reportedly has no plans to scrap laws which would allow religious institutions to discriminate against people whose lifestyles do not fit with their religious beliefs.
Attorney-General Nicola Roxon is in the process of consolidating states’ anti-discrimination laws under one banner, with new provisions for sexual orientation.
The proposed changes have met concern from religious groups, who currently have the right to discriminate against potential employees who may be deemed sinners.
Religious organisations are among the country's largest employers, particularly in the health and education systems, and currently can choose not to hire someone based on their sexuality – a practice which would be illegal for non-religious employers.
Opponents of the exemptions say organisations which accept government funding should comply with secular laws.
The Prime Minister has reportedly met with Australian Christian Lobby managing director Jim Wallace to assure him religious groups' freedom to discriminate won’t be infringed under the new laws.
Mr Wallace says he's satisfied by the government's plans.
"She has no intention of restricting freedom of religion," Mr Wallace told Fairfax.
The Prime Minister has a complex relationship with the Australian Christian Lobby.
In a sit-down interview with Mr Wallace ahead of the 2010 election, Ms Gillard promised to maintain 'traditional marriage', and would protect government funding for the controversial school chaplains program.
The PM was due to speak at the ACL's national conference late last year, but pulled out after Mr Wallace compared the health effects of being homosexual to the health effects of smoking.
At the time, Ms Gillard described Mr Wallace's comments as 'offensive, heartless and wrong'.