The iconic Australian spread Vegemite is on the chopping block as part of a new health crackdown in school tuck shops.

The New South Wales government has kick-started the move to warn public schools to avoid sugary foods, butter, cream and a range of bread spreads.

In a move to reduce obesity rates by five per cent before 2025, chicken nuggets, schnitzel and sausage rolls will only be available as 'occasional' items while Vegemite can only be used in "small amounts, lightly spread".

The Education Department have said these treats can't account for more than 25 per cent of the menu while the rest of the healthy list being replaced with rice paper rolls, vegetable soup and bean and corn bread.

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Water and milk will be the main drinks available - with sugar sweetened drinks not permitted.

Vegemite is just one item on a list of plenty of 'junk-food' related products to be restricted or banned from being sold at schools. Photo / Getty
Vegemite is just one item on a list of plenty of 'junk-food' related products to be restricted or banned from being sold at schools. Photo / Getty

"We can't teach good ­nutrition in the classroom and then sell rubbish in the playground," Education Minister Rob Stokes said.

The canteen is encouraged to stock food that has a 3.5 star health rating or higher.

The government says the move is necessary with a massive 22 per cent of children considered overweight.