The Age has published details of the government's Ruddock Review into Religious Freedom sharing that the report calls for religious based schools to have the ability to turn away students who they determine to be gay or transgender, and not hire teachers who are same-sex attracted or transgender.
Mr Morrison said the Government is still considering its recommendations.
While it may be existing Commonwealth law and the law in many states, neither Tasmania nor Queensland allow schools to discriminate against students on the basis of sexuality.
Set up after last year's historic same-sex marriage vote and handed to the Government in May, the report also recommends that a school take account of the "best interests of the child as the primary consideration in its conduct".
Wentworth has a large gay community, as well as a significant number of Jewish voters.
"There is a wide variety of religious schools in Australia and ... to some school communities, cultivating an environment and ethos which conforms to their religious beliefs is of paramount importance", Fairfax Media quoted the report as saying.
Premier Mark McGowan said he was "personally uncomfortable" with religious schools discriminating against gay students and teachers, but the review would look at what reforms were necessary.
But, according to Fairfax, it says people of faith are entitled to "equal and effective protection" alongside sanctions against discrimination on the grounds of race or ethnic origin.
On Thursday the Greens sought to capitalise on anger about the Ruddock review proposals by promising to push to repeal existing exemptions that allow religious schools to discriminate against staff and students.
Protection of religious belief already exists in nearly every jurisdiction, except NSW and South Australia.
"What kind of adult wants to turn away a child, wants to reject a kid because they are gay".
Critics, including civil liberty groups, members of the opposition Labour Party and gay rights advocates, said the government should not be proposing avenues for discrimination.
Morrison said the report would be released "in due course".
"I don't think it's controversial in Australia that people expect religious schools to teach the practice of their faith and their religion", he told Sky News.
However, the review said businesses would not be allowed to refuse customers on a religious basis and that registrars would have to conduct same-sex marriages.