This isn't end: defunded Islamic school

Sydney Islamic school Malek Fahd has vowed to take its fight to regain federal government funding to the nation's highest court.

The school on Monday lost a bid to overturn the government's decision in February to withdraw about $20 million in funding following concerns about how it was using the money.

Education Minister Simon Birmingham in a statement said an independent reviewer affirmed the original decision, and funding would end on Friday.

The school's lawyer, Rick Mitry, said it was a disappointing decision because the school did everything to comply with the orders in the past two months.

However, Malek Fahd would exercise its right to go to the Administrative Appeals Tribunal and was prepared to go the High Court if all other bids failed.

"It's not the end of the day by any stretch of the imagination," Mr Mitry told AAP.

The school had money to operate until the end of the year and would not close down any time soon.

Mr Mitry said parents and students should not be concerned.

"The future still looks good."