Labor has jumped on a potential deal to restore $1.7 billion in funding for Catholic schools as a "humiliating admission" the schools funding system is broken.
The sector campaigned hard against the new funding policy in the Queensland seat of Longman, where the coalition suffered a bruising by-election defeat.
Catholic Education bosses met with Education Minister Simon Birmingham on Tuesday after reports a new deal could be reached in the next two weeks.
But it's understood nothing concrete has been offered.
Labor leader Bill Shorten said the prospect of a new deal was the result of an "electoral smack on the bottom".
The opposition says cuts in the wider education sector amount to $17 million and must be reversed.
"Malcolm Turnbull has been forced into a humiliating admission that his school funding policy is in crisis," Labor's education spokeswoman Tanya Plibersek said.
The government, through cabinet minister Steve Ciobo, maintains the government is putting record funding into schools as part of a shift to a needs-based funding model.
The Australian Education Union has said instead of a special deal on Catholic school funding the government must first restore funding to public schools.
