The faith cap on new state schools has been retained in name alone as the government has backed the creation of a new wave of schools that can select all their pupils on the basis of religion.

The Department for Education is set to spend some of its £270 million free school budget to help groups set up new voluntary-aided schools that can select all pupils according to faith.

The faith cap on new free schools, which means they can only select 50 per cent of pupils on the grounds of faith, will remain.

But faith groups now have a way around this, thanks to the millions diverted away from the free schools budget to meet religious wishes.

The cap has been a source of major controversy with the Roman Catholic Church saying it prevented it from opening new schools. Earlier this year education secretary Damian Hinds indicated that he wanted to scrap it.

Faith groups are now being backed to open schools with 100 per cent faith admissions through the VA route, providing they can find 10 per cent of the capital costs.

The department has said it will “help create new VA schools for faith and other providers to meet local demand, supported by capital funding”.

‘Alternative routes to open segregated schools’

The announcement means the government is looking to financially back the opening of new non-academy maintained schools for the first time since Michael Gove expanded the academies programme in 2010.

The VA route already technically allows new schools to apply to open with up to 100 per cent faith-based admissions.

But the DfE is now pledging financial support for such schools - paying up to 90 per cent of the capital costs with the rest being met by the proposers. Previously, local authorities would have paid the majority of the capital costs.

The DfE said that the £270 million committed to its free school budget would now be used to create 110 new schools - both free schools and VA - by 2020.

The Church of England’s chief education officer the Rev Nigel Genders welcomed the announcement. He said: “As well as embracing the opportunities of academies and free schools, we have a strong track record of providing 1,700 VA schools and welcome the opportunity to consider developing more of them.”

Humanists UK welcomed the decision to retain the faith cap in free schools. However, it expressed regret that “the government still feels obliged to appease the unreasonable demands of a handful of religious organisations by offering alternative routes for opening fully segregated schools.”

A DfE spokesman said the new VA schools will be expected to play an active role in their communities.

Last month Tes exclusively revealed that former education secretary Justine Greening was against the removal of the faith cap, which she said would not help to prepare pupils for life in modern Britain.