Independent Sydney MP Alex Greenwich will soon introduce a private member's bill to State Parliament to abolish the law, which he says could be used against highly vulnerable teenagers.
''It is already so hard to come to grips with your sexuality,'' said Mr Greenwich, who is gay.
Under the NSW Anti-Discrimination Act, it is unlawful for education authorities to refuse admission to, or expel, a student for being gay, lesbian or transgender.
Private schools and colleges are explicitly exempt from this law.
The bid to remove those exemptions is expected to be opposed by most religious school authorities, who told The Sun-Herald that, while there are few, if any, examples of students being expelled on the basis of their sexuality, it was important to retain the exemption to preserve their religious freedom.
The exemption is similar to many that exist in federal anti-discrimination laws for religious organisations, including schools.
Ian Baker, acting executive director of the NSW Catholic Education Commission, said the fact that so few, if any, cases of students being expelled were widely known was testament to the fact schools tended to treat such students with sensitivity.
''It speaks for itself,'' he said. ''It's exercised with great caution and consideration. The objective is not to punish, but to protect the rights of those families who send their child to a school based on a religious faith.
''We couldn't agree to the exemptions being removed unless we could be assured that there's an alternative way of guaranteeing freedom of religion, which is an internationally recognised human right.''
Laurie Scandrett, chief executive of the Sydney Anglican Schools Corporation, agreed: ''Most private schools have a religious ethos, they stand for something, and if these exemptions were removed that would break down the ability of these schools to maintain whatever their particular ethos is.''
But Justin Koonin, from the Gay and Lesbian Rights Lobby, said he questioned why schools wanted the laws if they did not use them. ''It's not just that the student can be expelled, they can be discriminated against within the school environment, and the school doesn't have to do anything about it.''
In a submission to the recent Senate inquiry into federal anti-discrimination laws, the Human Rights Council of Australia argued that organisations that are wholly or partially funded with public funds, including religious schools, should not be granted exemptions on religious grounds.
''It is reasonable for the state to require public funds to be expended and applied wholly in accordance with principles of nondiscrimination,'' it said.
The most recent national report on same-sex-attracted young people found school was the most common place they experienced abuse.
While in opposition in 2011, Greg Smith, now NSW Attorney-General, was open to reviewing the law.
''I personally think it is something that should be reviewed, looked at with a view to perhaps changing it. Times have changed,'' he said.
Mr Smith is on leave but a spokesman for the acting Minister for Justice, Brad Hazzard, said the ''government will consider Mr Greenwich's bill following its introduction as it does with all private member's bills".
Not all religious education authorities were opposed to removing the exemptions, though.
''While Jewish schools jealously guard against any incursion into our ability to teach the Jewish religion in a manner consistent with its tenets, and consider those tenets and that ability fundamental to our existence,'' said Len Hain, executive director of the Australian Council of Jewish Schools, ''we do not see any practical limitation, or the imposition of any practical burden on that ability from the amendments deleting the specific exclusions to the Anti-Discrimination Act.''