Guidance warning schools against using resources from organisations that have expressed a desire to end capitalism will be reviewed by the Department for Education (DfE) following the threat of legal action.

The guidance, published in September, was criticised by teachers, MPs and human rights groups over the risk it could impinge on freedom of belief, speech and expression in the classroom.

In a pre-action letter sent in October, the Coalition of Anti-Racist Educators (Care) and Black Educators Alliance (BEA) said the guidance would prevent teachers using material from groups including Black Lives Matter and Extinction Rebellion, limiting anti-racism teaching.

On Monday, the education secretary, Gavin Williamson, notified the group’s lawyers that “the wording of the guidance is being reviewed in light of issues which your clients have raised”.

In the guidance issued for school leaders and teachers in England, the DfE categorised anti-capitalism as an “extreme political stance” and compared it with opposition to freedom of speech, antisemitism and endorsement of illegal activity.

The guidance said schools should not “under any circumstances” work with or use material from groups that do not “condemn illegal activities done in their name or in support of their cause” or promote “victim narratives that are harmful to British society”.

A letter sent to Williamson in early October by the law firm Bindmans on behalf of Care and BEA claimed the guidance failed to properly account for issues of discrimination, and that it was vague and poorly written. The groups launched a crowdfunding page to proceed with a judicial review if the department refused to withdraw the guidance.

The announcement of a review was welcomed. “Within the process of evidence collection, we have heard from many students, teaching staff and parents of the impact of the guidance, which would see conversations on injustice and inequality outlawed from the classroom,” a spokesperson for Care said.

Rachel Harger, of Bindmans, said: “We hope that given the obvious failures and shortcomings of the current guidance the secretary of state will accept that, as part of this review, a broad consultation with teachers, parents and trade unionists is not just desirable but entirely necessary. We will now stand by our clients as they anxiously await the outcome of this review.”

A DfE spokesperson said: “We have provided schools with the materials that will give them the confidence to construct a curriculum that reflects diversity of views and backgrounds, including how to offer a balanced presentation of opposing views where political issues are brought to the attention of pupils.

“We are clear that schools should not under any circumstances work with external agencies that take or promote extreme positions or use materials produced by such agencies and have set out a non-exclusive list of extreme political positions in the guidance.

“We are reviewing wording of the guidance to explore where we can provide further clarity on these points.”