Private schools would be able to create "satellite" Indigenous-only campuses that would reap hundreds of thousands in extra taxpayer funding under reforms presented to the Turnbull government.
As entirely Aboriginal campuses, the satellite schools would be eligible for maximum government subsidies, worth tens of thousands a year per student - regardless of the wealth of the parent school.
The idea is being pushed by the Association of Heads of Independent Schools of Australia, whose chief executive Beth Blackwood played down concerns about segregation of Aboriginal students.
"It's not an isolationist approach. They do have opportunities to integrate with the wider school community," she told Fairfax Media, citing extra-curricular programs like sport and music.
"At the end of the day, if you're working in partnership with the Indigenous communities and it's something they want for their youth ??? then it can work."
In its pre-budget submission to the Turnbull government, AHISA pointed to schemes run by St Andrew's Cathedral School and Barker College - both in Sydney - that had achieved "exceptional results".
Gawura School was spun out of St Andrew's and is now registered as its own entirely Aboriginal school, meaning it attracts the highest possible rate of additional funding from the federal government.
A similar initiative, Melbourne Indigenous Transition School, was launched in Richmond last year as a stand-alone independent school, offering places for 22 pre-secondary Aboriginal students.
The change sought by AHISA would allow private schools to establish satellite campuses without registering them as separate schools, which requires a separate board and principal.
In its submission, AHISA said the reform would "speed up the process", reduce administrative costs and encourage the proliferation of satellite campuses.
Education experts welcomed the interest independent schools were showing in closing the education gap, but said it was vital the plan be executed fairly.
Pete Goss, the director of the Grattan Institute's school education program, warned it could "create more segregation" if schools cherry-picked bright Indigenous students rather than opening a lottery.
"They have an obligation to take any Indigenous student who is needy," he said.
Mr Goss also argued schools should be prepared to cop a reduction in funding at their main campuses if they segregated the most disadvantaged students to a satellite campus.
"If you're going to ringfence, you ringfence on both sides," he said. "I don't think they would expect to have their cake and eat it too."
But the Turnbull government, which is planning a major overhaul of school funding later this year, backed away from the proposal on Tuesday.
Education Minister Simon Birmingham said he welcomed all ideas but the government already provided $278 million annually in Indigenous loadings to schools.
Those schools already have "the autonomy to make decisions about how they distribute that funding to students and between campuses", Senator Birmingham said.
All schools are eligible for the loading, which starts at 20 per cent per student and increases to 120 per cent if the school's entire student cohort is Aboriginal.
Jennifer Buckingham, a senior research fellow at the Centre for Independent Studies, was "squeamish" about segregation but said satellite campuses could work if they served a genuinely different community.
For example, Darkinjung Barker College on the NSW central coast is 70 kilometres from the main Barker College on Sydney's upper north shore.
"It is much more justifiable to have a separate campus that is aimed particularly at Indigenous students if it is located in the area they live," Dr Buckingham said.
Mr Goss said the only holistic way to close the education gap was "a full court press" from schools serving Indigenous communities, most of which were public.
