Generate Ministries has won $4 million to provide chaplains to 202 of the 438 NSW schools participating in the scheme in 2016.

The Hillsong-linked Your Dream will earn $1.4 million for 70 schools (up from 50 last year), while Macquarie Life Church will provide chaplains in 20 regional schools.

But for the first time 24 schools have instead chosen their local P&C to provide a religious chaplain, and four have opted for the YWCA.

Principal groups, which had opposed Abbott government changes that excluded secular welfare workers acting as chaplains, said they welcomed the involvement of P&Cs this year.

"It's a step in the right direction," said Primary Principals Association president Geoff Scott. "Its a bit disappointing it hasn't been taken up more broadly."

President of the NSW Secondary Principals Association, Lila Mularczyk​, said: "It is far more beneficial for schools to have access to a broader range of providers for the chaplains program. It is really important that parents are involved in any additional programs offered in schools."

A pastor linked to Generate Ministries had led the campaign against Gayby Baby last year amid accusations Burwood Girls High, which planned to screen the film, had cancelled religious classes run by the group.

Generate Ministries has historically dominated the National School Chaplaincy program in NSW, earning $3 million last year, and had hoped to double its funding with aggressive marketing to 2000 NSW schools.

The then Australia's Human Rights Commissioner Tim Wilson wrote to the Baird government last year expressing concern that the national school chaplaincy program could be detrimental to gay and lesbian students, in the wake of the Gayby Baby furore.

A fortnight later the NSW education department sought to broaden the range of chaplain providers in 2016. It pre-approved a wide panel of 60 groups, including many P&Cs, from which schools could choose.

Generate Ministries and Your Dream did not return calls.

Although funding of $20,000 per school comes from the federal government, it has been allocated by the NSW government since 2015.

New rules in NSW state the program is voluntary, chaplains can be from any faith, must not proselytise, and hold a minimum Certificate IV in youth work or pastoral care. Schools must also provide evidence they have consulted with parents before choosing a chaplain.

The NSW government signed a contract worth $1 million with Your Dream this week after 50 schools opted for the church group to be paid directly by the department. Your Dream and Generate Ministries are advertising for staff to fill the chaplain positions.

Mr Scott said the welfare need in schools went beyond what religious chaplains were able to provide, and he welcomed a separate NSW government commitment to pay for an extra 236 counselling and psychologist positions. The Baird government has also committed to funding 200 welfare and support officers.

"The chaplains program is not the only answer," said Ms Mularczyk.