All new schools will have to demonstrate that they are working in partnership with other religious and secular schools, Education Secretary Estelle Morris told the Church of England's general synod this week.
New guidance will be issued to school organisation committees, which plan school places, after Christmas.
Ms Morris said: "I don't have an answer to those Muslim, Hindu and Sikh parents in my constituency who say to me I want to exercise my right - the right which for centuries we have given to Jewish and Christian parents - to have a faith-based education for my child. I want to show the same tolerance that all our predecessors have shown to a parent's right to a faith-based education.
"The real challenge to faith schools is how can you, while being a faith school, be a more inclusive part of the family of schools and make sure the children in your care grow up with the tolerance, understanding and respect that will make them the rounded citizens we all want?" She said that she would much rather minority faith schools were in the state sector - where they are subject to the national curriculum, national testing, performance tables and Office for Standards in Education inspection - than privately run in the independent sector.
Since 1997, nine private schools have moved into the maintained sector and four others have been set up new. There are 4,716 Church of England schools, 2,110 Catholic, 27 Methodist and 32 Jewish.
Canon John Hall, general secretary for the Anglican board of education, welcomed Ms Morris's speech. The Church was already encouraging its schools to reduce the priority given to practising Anglicans in admissions policies - a "very difficult thing for us to say when we haven't very many places in secondary schools".
But Keith Porteous Wood, director of the National Secular Society, said ministers were trying to mollify public concerns about segregating children by faith, following the summer's race riots in northern cities and the events of September 11.