Institutional racism is depriving Muslim children of the chance to go to their own faith schools, according to a report published this week.

The state system is failing to meet the needs of Islamic pupils, says the report, which calls on schools to do more to adapt to the needs of Muslims.

Muslims in Education, published by Islamic groups and launched by Baroness Uddin, a Labour peer, has reignited the debate over the government-backed expansion of faith schools.

Just five Muslim schools qualify for state funding, despite there being more than 80 in the independent sector. This compares to more than 4,600 state-funded Church of England schools and about 2,000 Catholic. Muslims make up 2.7 per cent of the UK population.

The report claims institutional racism leads local education authorities to reject or delay approval of Muslim schools.

Baroness Uddin said: “There are not that many teachers, there are not that many governors, there are not that many policy-makers who are of Muslim faith. It feels that there is a gap in the education system.”

But the Local Government Association said Muslim schools often failed to agree to the rules regarding state funding Graham Lane, the association’s education chair, said: “If independent Muslim schools want to become part of the state system then, like any other independent school, they have to agree to abide by admission rules and teach the national curriculum.”

Critics of Muslim schools say many of them are unwilling to accept the constraints of the national curriculum.

The report calls for more single-sex schools for 11 to 18-year-olds, training for teachers and governors in religious awareness and the creation of prayer rooms in secondaries.

Schools with large numbers of Muslims should offer special classes in Islamic subjects and the Government should work with Muslim groups to create an Islamic studies A-level, it said.

But the report was immediately attacked by secular groups and Labour MPs concerned that any expansion of Muslim schools would increase segregation in the state system.

Keith Porteous-Wood, executive director of the National Secular Society, said: “Proposals for a hundred new CofE schools and handful of creationist academies are now understandably to be followed, as we predicted, by a raft of minority faith schools.

“This is leading inexorably to an educational system split down religious and therefore race lines. The long-term adverse consequences for race relations are worrying and possibly irrevocable.”

Keny Fredericks, head of George Green’s, a mixed secondary in the east London borough of Tower Hamlets, where about 40 per cent of pupils are Muslim, said: “If you are going to have social inclusion kids need to grow together.

“Our motto is all different, all equal. We make sure pupils’ religious needs are catered for, especially during Ramadan when we offer a lighter curriculum to give them time for prayers.”

A Department for Education and Skills spokesman said: “It is up to individual governing bodies, schools and LEAs to decide if they wish to provide facilities aimed at certain religious beliefs. We know that many more schools and LEAs are doing just that.”

Details of Muslims in Education, by the Association of Muslim Social Scientists, the Muslim College UK, the Forum Against Islamaphobia and Racism and the development campaign FED 2000, available from 0208 969 7373.