The Evangelical Alliance and the Christian Institute fear church classes still face potential inspections by Ofsted regardless of whether the Counter-extremism bill becomes enshrined in law.
Simon Calvert, deputy director for public affairs at the Christian Institute, told Premier's News Hour: "If the government wanted to go ahead with some kind of regulation and inspection system, it could do that without the need for a counter-extremism bill. We have to be on the alert."
A Whitehall source was quoted by the Observer newspaper on Sunday as saying the bill was "sinking without a trace" and it's understood the proposed legislation will be quietly set aside.
Head of public policy at the Evangelical Alliance, Simon McCrossan, told Premier: "I have no grounds to believe that the government, at the current time, are dropping that proposal because only recently Lord Nash, the government's education spokesperson for the House of Lords, confirmed that the government remained committed to this policy."
Under the plans, Sunday schools and other out-of-school settings which have more than six hours per week of contact time with children would be inspected to ensure they were upholding "British values" and not sharing "extremist views".
Simon McCrossan from the Evangelical Alliance said: "The definition of what an extremist is, is entirely elusive and certainly falls way below the degree of precision needed for any sort of legal certainty that would be required by the courts or indeed any law; that's what we've said to the government all along.
There is concern such a system will lead to state regulation of Christianity, while discussing issues like homosexuality or Islam at Sunday school could land a church in hot water with Ofsted.
Simon Calvert from the Christian Institute added: "Ofsted's hostility to some Christian schools has really destroyed the trust that many Christians had it in and that's one of the reasons why we are so concerned about the idea of giving Ofsted a role in churches."
Premier has approached Ofsted for comment.
A Home Office spokesperson said: "Legislation to tackle extremism is being considered within Government. We will consult fully on any legislation before it is introduced."
Click here to listen to Simon Calvert from the Christian Institute speaking with Premier's Aaron James:
Click here to listen to Simon McCrossan from the Evangelical Alliance speaking with Premier's Alex Williams: