Victoria has banned religious organisations from running prayer groups, handing out Bibles and delivering other unauthorised information sessions in state schools during school hours.
The directive has been issued by the Education Department under recent changes to the delivery of Special Religious Instruction (SRI) to students in public schools.
A government spokeswoman said the directive only affected religious activities that were run by unaccredited teachers or external groups.
But Dan Flynn from the Australian Christian Lobby said the guidelines appeared to cover all activities by students.
"In the SRI policy, the formal wording appears to ban prayer groups, youth groups, clubs, info sessions or workshops," Mr Flynn said.
"It says that those forums or the events constitute promotion of specific religions in schools outside SRI and are not permitted.
"It's one thing to say that education in state schools should be secular - we agree with that - but it's quite another step to drive any religion out of schools, particularly at lunch time when the children are free to form their own clubs and do their own activities.
"This is a serious limitation on freedom of association, freedom of religion for high school students and state school students."
Parent Lara Wood from Fairness In Religions In Schools (FIRIS) said the claim that students' rights were being infringed was "absurd".
"It's not against any individual students of faith expressing their faith or bringing a Bible into school and praying," Ms Wood said.
"These new clarifications of the law are saying that religious groups and corporations can not use our schools as mission fields to come in and use the schools as an extension to operate their youth ministry.
"This is really no different then if the Minister of Education said to the Liberal or Labor Party that you can't go into schools at lunch time and hold political rallies."
Distributing Bibles to students banned in schools
The changes to the religious instruction policy were prompted by a report that found the state's key provider Access Ministries had breached its guidelines by handing out a so-called "Biblezine" containing homophobic material.
Under the guidelines, which came into effect this month, accredited instructors are permitted to teach a maximum of 30 minutes religious instruction per week, as part of the scheduled curriculum.
But the Government's School Policy Advisory Guide stated that religious instruction could not be taught in schools outside of these approved classes.
SRI cannot and does not take the form of prayer groups, youth groups, clubs, information sessions, or workshops... Any other forums or activities as noted above, would constitute promotion of specific religions in schools outside SRI, and are not permitted.
It would also be against the guidelines for anyone, including approved providers, to distribute "religious texts (e.g. Bibles)".
However the rules would not stop students from learning about religious celebrations, such as Christmas, Eid or Hanukkah.
Students may be taught about a religious celebration, festival, special event etc., as part of the general religious education curriculum at a school by government school teachers.
This may include recognition of and educational activities relating to key religious celebrations such as Christmas, Eid, Hanukkah and others.
And students would not be prevented from praying.
For the avoidance of doubt, students engaging in prayer in observation of their religion at lunchtimes is not SRI as there is no element of "instruction".
Such prayer cannot be led, conducted by or at the instruction of staff or parents/visitors/volunteers.
Ms Wood said under the new guidelines, parents must also now give their written consent for their children to attend SRI via a new government-approved form.
She said that while religious instruction had been opt-in in Victoria since 2011, the new forms would make it clear to parents the difference between religious education and instruction.
"Many parents have been under the false impression that it's education about many religions, and we've always believed that once parents know the facts they'll make an informed choice," Ms Wood said.
"It does give informed consent now to parents and lets them know that it is instruction in how to live according to that particular faith that they're learning about, not education."