It's bringing a judicial review against minister's proposals to make independent schools challenge prejudice against other faiths.
A consultation paper outlines how the Education Secretary Nicky Morgan, who's a Christian, would be able to take 'regulatory action' against private schools that tolerate homophobia or sexism.
It also says she would be able to step in when prejudice against other faiths is "encouraged or not adequately challenged."
The Christian Institute is claiming the proposals mean the Education Secretary could force other religious festivals to be given the same prominence as Christmas or prompt legal actions which the institute claims could result in some schools choosing to stop celebrating Christmas to avoid possible repercussions.
Colin Hart, chief executive of the institute, accused the government overreacting, on Premier's 'News Hour', he said: "You may or may not agree with it, but one thing you can't do is sue the school over the way in which history is taught or maths is taught or whatever subject there is, because the law excludes discrimination from the content of the curriculum, but that's to change for independent schools, free schools and academies"
A Department for Education spokesperson said: "The Independent School Standards are designed to ensure every school prepares children for life in modern Britain. We make no apology for demanding high standards and the promotion of tolerance and respect of all faiths and cultures.
"It is simply untrue to say that the proposed changes - which received 1400 responses in the last six weeks - would prevent teachers using gender-specific terms or require schools to downgrade Christian festivals.
"We have received a letter from the Christian Institute's legal representatives and are considering our response."
Colin Hart, Christian Institute: