There were fears the school, which has a student population of 93, could be downsized to just 27 or even forced to close after a state-wide directive by the department to enforce out-of-area enrolments proceedures.

Out of area enrolments are where a student, living in one area and zoned for a certain school, can apply to attend a different school in their local area.

Changes to the policy could have a major impact on a small school like Terara, where at least three quarters of its students are from outside the school's zone.

The majority of Terara school's drawing region is dairy farming land and does not contain many young families, while the Terara village itself, adjacent to the school, also contains a majority older demographic, meaning the number of actual students in zone is heavily restricted.

News of the department's state-wide directive to enforce out-of-area enrolments procedures created plenty of angst among the Terara School community late last week, with some parents actually being told their children, who were new enrolments for next year, were not eligible to be enrolled.

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For many years the school has also operated on a siblings' right policy and there were fears families might also be split.

The news about the proposed changes was broken to parents of enrolments for next year and P and C members on Thursday evening, sparking an outcry.

The department revealed the school's numbers could be determined by the number of permanent classrooms within the school.

That meant Terara, as it only has one permanent classroom, the beautiful historic sandstone building, could be capped at just 27 students.

For more than 20 years Terera has had three demountable buildings, catering for three classes.

South Coast MP Shelley Hancock even weighed into the unfolding drama on Friday, saying on Facebook she would "never allow the closure of this school".

Mrs Hancock said she had been in urgent contact with minister's office and regional director throughout regarding concerns and their responses indicated that there was no policy change to what has occurred previously.

"Out of area applications apply to a panel with siblings accepted as usual procedure," she said.

"There is no intention of closing this school. I would never allow the closure of this school."

It is understood the regional director was due to visit the school on Monday.

A department spokesperson said the updated policy did not affect current enrolments.

"The updates to the policy will not affect the viability of the school," the spokesperson said.

"Children have always been entitled to enrol in their local NSW public school, with principals able to accept out-of-area enrolments if places are available, and Terara Public School will continue to operate under this long-standing policy.

"If the school has capacity, out of area applications for siblings of current students are given priority.

"As they have in the past, exceptional circumstances will also be considered when assessing out-of-area enrolment applications."

Terara P and C secretary Kara Knezevic said the news had been disturbing.

"What this means for families at Terara is that any non-local siblings of current students will not be accepted into Terara, splitting families up," she said.

"Terara has three demountable classrooms that have been on the school grounds for over 20 years, we need to get these classrooms reclassified as permanent classrooms."

The P and C requested an urgent exemption to this policy change, at least for siblings for 2020 and also to meet with and consult with the Department of Education to seek clarification and justification of the policy change.

"The department is taking choice out of parent's hands and dictating to parents where they can and can't send their children for school," she said.

"The department's motto of every child is valued, known and cared for, appears to have been thrown out the window in making this policy."

Ironically the drama blew up just days ahead of the 65th annual Education Week which this year takes the theme "Every Student, Every Voice" encouraging students to feel informed, empowered and supported in their ambitions and opinions.

A on-line petition set up to try and change the policy and "save the school" was established on Thursday night after the meeting and has already had more than 2800 signatures of support.