The hardline Vatican position, only four months after the world's bishops met in Rome to respond to the child sexual abuse crisis, described government attempts to force priests to report confessional allegations to police as a "violation of religious freedom".

The Vatican statement adds a new element to Australia's already heated religious freedom debate in the wake of the Israel Folau contract breach saga, and as the Morrison Government proposes legislation with sweeping new protections for religious believers.

Pope Francis approved the statement one week before attorneys-general from across Australia gave a government working group three months to advise on a child abuse royal commission recommendation that priests should no longer be exempt from reporting abuse allegations heard in confession to police.

The NSW-led working group of state and territory government representatives will report back to the Council of Attorneys-General in late September.

NSW Attorney-General Mark Speakman welcomed the referral and said the NSW Government had consistently argued there should be a national approach to the issue, after South Australia passed new laws in 2018 removing reporting exemptions for priests.

The Royal Commission into Institutional Responses to Child Sexual Abuse acknowledged laws requiring priests to report allegations heard during confession would be an "intrusion into religious practice" that would "raise serious issues of conscience for Catholic clergy".

While a person's right to freely practise their religion in accordance with their beliefs was "fundamentally important", the right was "not absolute" and the religious beliefs "must be balanced against the right of children to be protected from sexual abuse", the commission said.

Hunter abuse survivor Anthea Halpin, who was sexually abused by Catholic priest Denis McAlinden during confession, said she had no doubt some priests would defy any laws compelling them to report abuse, but it was important for Australian governments to show no groups are above the law on the issue of child sexual abuse.

"If allegations are raised during confession of course they should be reported to police. It's commonsense," Mrs Halpin said.

Hunter survivor advocate Peter Gogarty criticised the Council of Attorneys-General referral to the working group as "politics" because exempting priests from reporting abuse allegations "should have been stopped the day after the royal commission's final report".

"If new laws aren't implemented it's because governments are getting pressured by the Catholic Church," Mr Gogarty said.

RMIT University academic and former Catholic priest Professor Des Cahill said the Vatican statement showed it "takes a very hard line on the seal of confessional" and Pope Francis' description of government attempts to legislate reporting as a religious freedom issue put greater pressure on Australian legislators.

"While everyone's focusing on the Israel Folau case (where the rugby player lost his contract after controversial tweets based on his religious beliefs), the Vatican statement on the seal of the confessional is a much bigger issue," Professor Cahill said.

Intense public and media interest in the seal of confessional issue was despite relatively few known cases of abuse allegations being raised during confession, he said.

"I think it's a more symbolic issue than a real issue," he said.

The Catholic Church's Truth Justice and Healing Council, which represented Catholic dioceses and orders during the royal commission, said it was a "notorious fact" that the royal commission's conclusions on confession "took on a life of their own and attracted much more attention than many church observers believe is warranted by the practical realities of the sacrament".

The royal commission recommended new laws to create criminal offences for not reporting and failing to protect children from abuse in institutions, with no exemptions from reporting information obtained during confession.

Reform group Catholics for Renewal said the Catholic Church had to "carefully examine the seal of confession as it currently operates", in a submission to a major Australian Catholic conference in 2020 addressing problems raised during the royal commission.

Victorian survivor advocate Chrissie Foster, whose daughters Emma and Katie were sexually abused by a Catholic priest, said the church had failed to protect children from priests who confessed crimes in the confessional.

"Why should church law trump our civil laws that are there to protect children?" Mrs Foster said.

The notorious case of priest Michael McArdle, who made an affidavit in 2004 stating he had confessed to 30 priests of molesting children over a 25-year period, showed why new laws were needed, Mrs Foster said.

In the statement approved by Pope Francis on June 21 the Vatican said any "political action or legislative initiative" aimed at "forcing" the breaching of the confessional seal "would constitute an unacceptable offence" against the church.

The Vatican used the term "usque ad sanguinis effusionem" - the shedding of your blood - to describe how far a priest had to be prepared to defend the sacramental seal, as an act of "loyalty" towards the person making confession and a "martyrdom" to the church.

A survivor of Hunter priest Denis McAlinden, who was sexually abused by the priest from the age of six, told the church she reported the abuse to another priest during confession.

The priest was "very angry and told me I was an evil bad girl and that I would burn in hell", the survivor said in a claim against the church.

The confessor priest "said I had to go to church every day, pray hard and must never talk about McAlinden again", she said.