PRIVATE schools chosen by less well-off parents could receive a multi-billion dollar funding boost under changes proposed by the federal government.

New legislation introduced to parliament on Wednesday would change the way the government calculates the income of parents to measure of how much taxpayer money a school is entitled to.

"(This) will ensure more funding flows to the schools that need it most," Education Minister Dan Tehan told parliament.

The government estimates the change will open up an extra $3.4 billion for non-government school funding over the next decade.

"The new methodology will use the best available data to estimate the capacity of parents and guardians to contribute to the cost of schooling," Mr Tehan said.

It follows recommendations by the National School Resourcing Board to change the way the government calculated the incomes of student's parents and guardians.