Prime Minister Tony Abbott has not ruled out a controversial idea to make wealthy families pay for their children to attend public schools but says it would be a decision for the states and territories.

The idea, contained in confidential discussion paper and revealed by Fairfax Media, would end the concept of universal access to school education in Australia.

But Education Minister Christopher Pyne took to Twitter on Monday to distance himself from the idea, less than 24 hours after saying the government would not 'pre-empt' the reform process.

"Charging wealth parents for their children to attend public schools is not the government's policy. I don't support it," Mr Pyne tweeted.

"The Australian government does not and will not support a means test for public education. Full stop. End of story."

The green paper on school reform, developed in consultation with the Department of Prime Minister and Cabinet as part of the federation white paper process, has proposed four different ideas for school funding changes, including maintaining the status quo with a reduction in the Commonwealth involvement or making the federal government the dominant funder of all schools.

Under that last option, the paper floats the prospect of public school fees for high-income families.

Labor has demanded the government immediately rule out the radical idea.

But speaking at a short media conference in Canberra on Monday, Mr Abbott applauded the creative thinking behind the proposals but handballed any responsibility for change.

"Obviously there is a federation white paper reform process taking place right now," he said.

"I think it's good that some of the states and territories at least are thinking creatively about how they can responsibly fund their operations.

"But any question of how you fund public schools in terms of what contribution parents might be expected to make is absolutely a matter for the states and territories."

Mr Abbott said the federal government did not have "any role at all" in the running of public schools.

The Commonwealth is slated to spend $69.5 billion on schools over the next four years.

Mr Pyne's spokesman said on Sunday the government "doesn't intend to pre-empt" the green paper process.

But on Monday, Mr Pyne tweeted: "If the states and territories want to charge wealthy parents fees for public schools that's a matter for them."

Labor has seized on the report and said the Coalition's first federal budget - which included plans to include a fee for previously free visits to the doctor and a proposal to uncap university fees - was just the beginning "of an even more extreme attack".

"Fees will rise in non-government schools and fees will be imposed on government schools," said the opposition's acting education spokesman, Mark Butler.

"Every student in every school will be hurt.

"There is no question that Tony Abbott is out to decimate our schools – the only decision left for him is how he will do it."

Treasurer Joe Hockey also poured cold water over the idea on Monday morning and said Mr Pyne would rule out means-testing of public schools later in the day.

"It's not our policy. The states run the schools. And it's obviously not something that we're interested in," Mr Hockey said. "I think you're speculating about something that isn't policy and isn't going to happen."

Victorian Premier Daniel Andrews described the proposal to make wealthy parents pay for state schools as "appalling".

"Victorians will not cop this. Free public education is just that, we are not having a situation where a person's parent's income determines the start they get in life."

When asked if the proposal signalled the end of the Gonski funding reforms, Mr Andrews said the Abbott government had "very little interest in an equity-based funding model that is sector blind".

"It is quite breathtaking."

He said a free public education was one of the fundamental planks of Australian society.

The proposal follows a recommendation by free market think tank the Centre for Independent Studies (CIS) last year to charge high-income families $1,000 a year to send their children to public schools.

with Henrietta Cook

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