(Transcript from World News Australia Radio)
It reverses a decision announced last week that the Coalition would be abandoning the funding agreements established by the former Labor government despite a promise during the election campaign not to do so.
Mr Abbott has been under intense pressure for breaking that promise.
Amanda Cavill reports.
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Last week the Abbott government announced it planned only to honour one year of the funding agreements set up by Labor, under the so-called Gonski scheme.
The government also planned to allocate a further 230 million dollars in 2014 to the states that did not sign on.
Mr Abbott says the new agreement includes the $1.2 billion taken from the education budget by the former Labor government because Queensland, the Northern Territory and Western Australia would not agree to the deal.
The return of the $1.2 billion will bring total additional school funding over the next four years to $2.8 billion.
The government will also honour funding promised to non-government representative bodies for four years, including $55 million to Catholic Education Commissions and $110 million to the Association of Independent Schools.
Education Minister Christopher Pyne says the government will amend the Australian Education Act in 2014 to dismantle the regulation and red tape that made the model virtually incapable of being implemented.
"That means there are no second-class students because of Labor's cuts before the election. Every student in Australia will be treated exactly the same way regardless of what jurisdiction. I think that's a big achievement. We promised we'd have Labor's level of funding and we've exceeded it. Labor's was $1.6 billion ours is $2.8 billion. We said that we would have a national model that was fair to all the states and territories and we have delivered that."
Mr Pyne says the in-principle agreements with Western Australia, Queensland and the Northern Territory meant no state school would be worse off under commonwealth schools funding arrangements.
Mr Abbott has defended the apparent backflip on schools funding.
"Knowing that we get certainty for four years Minister Pyne worked with the non-signatory states and territories to get the in-principle agreement we've now got. Now that we've got an agreement that will mean that we can have a fair and national system we've put all of the $1.2 billion back."
Mr Abbott says the government is committing to a four year funding model, not the six years promised by Labor.
He says the Coalition never agreed to a six-year education funding deal and doubted any of the state governments believed they would receive any of the promised cash beyond four years.
"I don't believe any of the states thought they would ever get that money from the Rudd/Gillard government. I think they all thought that money was essentially pie in the sky. we will deliver four year funding certainty. Funding agreements in education have traditionally been four year agreements so we have now got a four year funding in principle in place."
Mr Abbott says the mid-year economic and fiscal outlook in December will make it clear where the Commonwealth will finding the extra $1.2 billion.
The government will review the funding system in 2015, in line with legislative requirements.
