The country's Council of Ministers submitted the draft to the Austrian parliament. The draft included no key changes, and there still remain concerns over the law.
The article over banning foreign funding was not changed, as was previously demanded.
According to the article, imams -- Islamic preachers -- working in Austria can work until their visa expires. The imams will not get new visas, new imams will not be allowed to arrive and foreign funding to Islamic organizations will be banned.
According to the amendment, mosques with less than 300 community members will be closed within a year and those with more than 300 will have to register as a legal entity.
The authority of the prime minister to recognize and abolish religious organizations can only be justified in cases of "security and anti-democratic practices."
A new article was introduced to allow the government to cancel activities held by religious organization.
Two separate faculties based on the Alevi and Sunni schools of Islamic thought will be founded and will replace the Islamic Theology faculty at the University of Vienna.
The graduates of these faculties will be tasked with working at mosques or Alevi community places of worship, known as cemevi.
The draft removes the article that bans preaching by unregistered preachers and compels mosque preachers to translate their sermons into German.
The changes made to the law failed to satisfy Muslims in the country.
Fuat Sanac, the head of the Austria Islam Community, called the amendments "positive," but inadequate. Sanac said the community was expecting more amendments to the law.
"Some changes were made to the criticized issues, but they will not change our attitude to the law," Sanac said.
Sanac said there were no changes to articles that viewed Muslims as a threat.
He called for dialogue to overcome the problems.
The draft is expected to be passed by parliament in January 2015 and take effect in February.
The first draft, revealed by the government on Oct. 2, was criticized by non-governmental organizations, preachers, academics and international organizations as it violated the concepts of freedom, equality and religious freedom enshrined in international law.