The law is intended to safeguard Italy's cultural roots and comes at a time when Christianity has been removed from schools across the Western world.
Prime Minister Giorgia Meloni's party, the Brothers of Italy (FdI), drafted the law on Wednesday which aims to protect both Christmas and Easter celebrations.
Under the proposed legislation, according to BBC News, schools would be fined if they were to prevent "initiatives promoted by parents, students, or competent school bodies, aimed at activities linked to traditional celebrations such as Christmas and Easter, such as the setting up of nativity scenes, plays and other events related to them".
"Allowing the transformation of the Sacred Christian holidays into another anonymous type of celebration would constitute discrimination against the students and their families practicing the majority religion as well as an attack on the values and the deepest tradition of our people," the draft text reads.
Should the proposed legislation be enacted, headteachers who persist in removing nativity scenes would be subject to disciplinary action, the Guardian reports.
Lavinia Mennuni, a senator for the ruling Brothers of Italy party, introduced the legislation and said it's an effort to combat the left's agenda to erase Christianity from the religious holiday as a means to score points in political correctness.
"For some years now we have witnessed unacceptable and embarrassing decisions by some schools that ban nativity scenes or modify the deep essence of Christmas by transforming it into improbable winter festivities so as not to offend believers of other religions."
Riccardo Magi, secretary of the left-wing More Europe party, slammed the proposed legislation on X, formerly known as Twitter, saying that the bill "should offend all believers, as well as being unconstitutional because it contradicts freedom of worship."
Attilio Fratta, president of the national headmasters' association, was aghast by the proposal and released a statement thinking it was a "hoax."
"I am amazed how anyone can give weight to such news," he said, according to BBC. "We are faced with measures that are only useful for diverting the attention of Italians from the real problems of schools and the country."
"Operations like this which interfere, among other things, with the autonomy of schools, are not acceptable. We will support in every way the principle of school autonomy and the secular nature of public schools," said Fracassi.
Prime Minister Meloni's party has previously introduced legislation with the intention of protecting the Catholic faith. The objective of the legislation drafted by the FdI last summer was to prohibit Muslim prayer areas outside of mosques, as well as the conversion of industrial warehouses and garages into mosques.
"Allowing the transformation of sacred Christian festivities into another anonymous type of celebration would constitute discrimination against the students and their respective families practicing the majority religion," said Senator Mennuni.