WELLINGTON, March 28 - Under a 2017 amendment to the Education Act, which isn't due to come into effect until December 2019, any school, tertiary institution or private organisation can apply to become a Community of Online Learning - a COOL.
"The previous government ploughed ahead with the legislation for online providers despite experts and education professionals raising a number of concerns," Mr Hipkins said on Wednesday.
"We are proposing to do away with a policy that enables private entities to become accredited as a COOL and make a profit out of it."
Mr Hipkins said when the policy was being developed, even some National MPs had concerns that children with special learning needs might be "shuffled away from schools" and into a COOL.
National's education spokeswoman, Nikki Kaye, says the government is taking education back into the dark ages.
"Digital technologies have rapidly evolved in the decade since Labour was last in government and it's important that our education system reflects that," she said.
"That's why National established COOLs, with the intention of harnessing digital technology to provide more learning options for children and young people."
Ms Kaye says parents who home-school their children could have enrolled them in a COOL, opening them up to more subjects, or a rural school which didn't teach languages could have allowed its students to use a COOL to learn Mandarin or Te Reo Maori.
"Scrapping COOLs takes these possibilities away from children and young people, all because Labour is ideologically allergic to privately delivered services."