Islamic School of Canberra to continue operating for term two.

The Islamic School of Canberra is expected to remain open next term despite a major Commonwealth funding entitlement ending today.

There were concerns the school could be forced to close, but ACT Minister for Education Shane Rattenbury said he expected the school would open for term two.

"The Islamic School has indicated to the ACT Government that they intend to remain open until the end of this year," Mr Rattenbury said.

"Then beyond that they have sought registration through to 2021.

"We are operating on the basis that they assure us they have enough funds to continue.

"But we need to work with them further to get more information on that."

From today, the Commonwealth has ceased funding the school after revoking $1.1 million in recurrent funding over concerns about how the money was being spent.

The school was granted an extension until April 26 to appeal the February decision.

"The withdrawal of Commonwealth funding of $1.1 million a year is obviously very significant," Mr Rattenbury said.

"But if the school is able to identify a way to replace that funding and remain financially viable then there is no reason they shouldn't continue in the ACT."

State Government funding to continue

Mr Rattenbury said the ACT Education Directorate was continuing to work with the school authority, the Australian Federation of Islamic Councils (AFIC), on governance and financial viability.

"We need to know that the school can remain financially viable and that they have adequate governance mechanisms," Mr Ratternbury said.

He said the ACT Government's $400,000 in annual funding was continuing.

"The Federal Government has different assessment criteria to the ACT Government," he said.

"Our primary concern is financial viability and good governance.

"The Federal Government has other issues.

"At this stage I am confident the school is spending the ACT Government's money appropriately."

Plan B in wings to keep school open

The Canberra chair of an ad hoc interim community board said it had a plan to keep the school open if the Australian Federation of Islamic Councils was unable to cover the gap in funding.

Australian National University epidemiology expert, Suhail Doi, sent his child to the Islamic School of Canberra and was appointed chair of the board, which had a mandate to act for parents of students.

Dr Doi said he and the board were waiting to see if AFIC could resolve the financial and governance issues with the ACT Government.

He said the board had already secured financial pledges and developed governance polices in collaboration with another existing ACT independent school that would allow the Islamic School of Canberra to remain open.

This post originally appeared on ABC News.