Prentice said despite the concerns the bill is a strong and balanced piece of legislation.
"Rights are never absolute," Prentice told reporters in a conference call from Quebec City.
"This provides for a balancing of three important rights in our society: sexual orientation, parental rights, and the important responsibilities of schools boards.
"It will not make everyone happy, I recognize that. But I think it is the right balance for Alberta."
Introduced Monday, the Act to Amend the Alberta Bill of Rights to Protect our Children, or Bill 10, denies students the automatic right to form gay-straight alliances.
The bill passed second reading Tuesday night by a 42-10 vote.
The alliances are peer-support groups that have been shown statistically to reduce bullying and lower suicide rates among gay youth.
Instead, the bill gives schools and school boards the final say, with students free to challenge those rulings in court.
Prentice said he is allowing a free vote among his caucus members.
"Individual elected representatives will be allowed to vote their conscience," he said.
One of those caucus members, backbench Edmonton MLA Thomas Lukaszuk, voted against the bill Tuesday.
"I don't believe in bestowing human rights on people in an incremental manner," Lukaszuk told reporters.
"Either you grant it or you don't."
Prentice's caucus plans to use its majority in the legislature to limit debate on all three stages of the bill to two hours for each stage.
"It's an important bill, (but) there other matters that are important that we need in front of the legislative assembly," said Prentice.
Former provincial treasurer Jim Dinning condemned the Tories on Twitter for restricting the debate.
"Rights require full debate, never closure,” wrote Dinning.
Other Tories weighed in Tuesday on social media.
Brenda Meneghetti, who worked on former member of the legislature Ken Hughes' leadership campaign, said Bill 10 is a deal breaker and she is leaving the party.
"I wish them well," she wrote on Twitter.
Josh Traptow, head of the Calgary-Bow PC riding association, criticized the bill on Facebook, saying: "This world is hard enough for young people to come out and we need to ensure they have the supports they need."
There are 94 gay-straight alliances in Alberta, but the opposition Liberals say none is in faith-based schools, private schools or in rural areas.
The issue has grown over this year to become something of a political litmus test of tolerance for homosexuality in Alberta.
In the spring, a coalition of Progressive Conservatives and Opposition Wildrose members joined forces to vote down a Liberal motion urging the government support gay-straight alliances in all schools.
Some Tories voted for that motion, including then-associate minister Sandra Jansen.
Jansen is now a backbencher and sponsor of Bill 10.
She said Tuesday the bill is not everything she wants, but it advances the cause for gay students.
"There is a process of appeal," said Jansen.
"When a student is turned down for a GSA they can go before the school board and what we would like to see happen is we would like the school board to answer for why they don't want a GSA."
Both Jansen and Prentice pointed out the bill also removes a controversial section of Alberta's Human Rights Act that allows parents to pull students out of class when sexual orientation is taught.
Liberal Laurie Blakeman told the house Tuesday that Bill 10 will not protect gay students at risk and leaves enough loopholes to allow parents to still pull their children out of class when homosexuality is discussed.
The bill was a late addition to the fall legislature list amid growing support for Blakeman's private member's bill.
Blakeman's bill would have given students the automatic right to create gay-straight alliances, but has now been dumped from the order paper for Bill 10.