The information was to be included in the schools census, formerly known as the pupil level annual schools census, which is compiled every January.
Since 2003, schools have been required to report on their pupils' ethnic background. The Department for Education and Skills was considering compelling schools to collect and pass on details of their pupils'
language, faith, Traveller status and disability in order to compile statistics on the progress of different groups.
Options on the list of religions included: no religion, Wicca, and a personal belief system, as well as the major faiths. But in consultations the proposed form was criticised for breaking down Christianity into 13 denominations, but no sub-categories for other faiths.
Canon John Hall, head of education for the Church of England, said: "We were concerned at the way the religions had been listed. We were not absolutely clear what the data was going to be used for."
Tahir Alam, education spokesman of the Muslim Council of Britain, said: "We are disappointed with this decision. Muslim children are underachieving across ethnicities. If we don't have the statistics we cannot tackle these disparities."
The DfES said more work was needed to address criticisms. Faith will not be recorded as part of the 2007 census, although schools will be able to collect their own data. Information on Traveller status will be collected in 2008, rather than 2007.