Human Rights Commissioner Tim Wilson says while religious freedom is critical, there are necessarily also limits, and taxpayer funding of religious institutions, including schools, must be addressed.
Speaking ahead of an inaugural roundtable on religious freedom, Mr Wilson said the protection of religious freedom was critical to a broad cross-section of communities, "including those of belief, those without a belief, and those whose communities are affected by religious freedom".
The meeting in Sydney on Thursday, which will bring together members of the Jewish, Muslim, Hindu, Catholic, Anglican, Bahai, Russian Orthodox and Buddhist faiths, will discuss the preservation of religious freedom, as well as strategies to support religious inclusion and social cohesion.
But Mr Wilson, citing a case at a West Australian school in which the gay parent of a seven-year-old girl was told the pupil would no longer be allowed to attend the school if she again mentioned her father's sexuality, said taxpayer funding for religious institutions needs to also be a part of the discussion.
He said the incident at the Foundation Christian College in Mandurah "highlighted for people that while we accept there is an important role for religious freedom, that you can't then mistreat students and deny them access to education because of your ... religious views".
"It's good that we have religious institutions providing schools in a more cost-effective way than sometimes the government can do, and if that's consistent with people's private faith, and that's what they wish, then so be it," Mr Wilson told AAP.
"But we also have an expectation that schools will act in the best interests of children.
"They'll of course seek to foster their values but there's also a question about how far they can do so before they seek to discriminate against others."
The West Australian girl has since been removed from the school by her father but the case has sparked outrage and fierce debate, with the school also vandalised.
The issue of funding for religious institutions also has implications in terms of curriculum.
Mr Wilson said there must be a balance.
"I have no issue with funding being tied to curriculum per se but there has to be enough room within curriculum to make sure that people aren't forced to act against their conscience and that there's a preservation of religious liberty," he said.
The summit, to be opened by Attorney-General George Brandis, will also be attended by representatives from the Seventh Day Adventists, the Rationalist Society, the Humanist Society, the Atheist Foundation and the Church of Scientology.