Funding freeze lifted for Sydney school

A Sydney Islamic school ordered to pay back $9 million in school funding has had a government cash freeze lifted.

The NSW government launched action against the Malek Fahd Islamic School to recoup millions in public funding after an audit found the western Sydney school had operated for a profit.

The NSW Board of Studies had also raised concerns with the school's registration.

The state government put a freeze on its funding to the Greenacre school in January 2012.

It is understood the school received about $4 million from the state per year.

Funding from the Commonwealth government was not affected.

The Malek Fahd Islamic School chairman Hafez Kassem said he breathed "a sigh of relief" on Friday at news the NSW government had lifted its funding freeze.

Mr Kassem paid tribute to the hard work of the school staff and board but said some wanted to see the school's end.

"Some people did not care that the school could close down he said," he said in a statement.

Mr Kassem said neither the school nor the Australian Federation of Islamic Councils had done anything wrong but were victims of political infighting.

Legal action surrounding the $9 million repayment of state funding is before the courts.