The Victoria government is proposing to cut a week from teachers' holidays in return for a 9 per cent pay rise.
The offer has angered teachers, 30,000 of whom went on strike last week, 15,000 marching on the Victorian parliament, as part of a campaign for a 30 per cent pay rise over the next three years.
For the first time, teachers in Victoria's Catholic schools joined their state-sector colleagues in the 24-hour strike. Catholic teachers are not paid by the government, but want their salaries to be on a par with those in state schools.
Under the government's contentious proposal, teachers would start the school year a week earlier to undertake professional development courses.
Technically, Australian teachers are entitled to only four weeks' leave a year. But in practice they are not required to be at school during holidays. This means they have up to 12 weeks' break as they are not required to go back to school until the day before the year starts.
The Australian Education Union flatly rejected the government's plans and said the pay offer equated to an additional 91 cents a day.
State education minister Lynne Kosky said the government's offer was fair and gave teachers a salary increase of up to $10,000 (pound;4,000) over the duration of the next enterprise agreement.
Newly-qualified teachers earn $41,000 (pound;17,000) in Victoria. Heads of department earn around $60,000 (pound;25,000).