Feversham College in Bradford, formerly the Muslim Girls' Community School, has been rebuffed in its attempt to get the voluntary-aided status enjoyed by Jewish, Anglican and Catholic schools.
Despite notably more encouraging noises from Gillian Shephard, the Education Secretary, Muslim educationists have been angered by what they claim is a discriminatory rejection.
Feversham College had been the most likely candidate so far to get voluntary-aided status - under which the state pays for the running costs and most of the capital maintenance. Previous attempts by a Muslim school in Batley and the Islamia junior school in Brent, north London were turned down.
Feversham College was refused state money because, according to the Department for Education, it needs to make its premises safer and to improve its management structure. The DFE said that there are also doubts about its ability to teach national curriculum technology.
"We think it's a political decision," said Ibrahim Hewitt, a spokesman for the Association of Muslim Schools. "The DFE had ample opportunity to warn the school that these things needed putting right, and it failed to do so."
Yusuf Islam, chairman of the AMS, said: "The Government has thrown away yet another opportunity to demonstrate that Britain's two million Muslims are regarded as equal citizens.
"The Government promotes choice and diversity in education and yet consistently refuses to offer Muslim parents the same educational choice afforded to Christians and Jews."
In refusing to grant voluntary-aided status, Mrs Shephard said that her department would welcome another application from the 225-pupil school. "While I have had to reject this present application, I do not want it to be seen as closing the door on this or any other Muslim school joining the state sector. I have asked my officials to work with the sponsors of the Bradford Muslim Girls' Community School to help them overcome the current shortcomings in their application.
"Let me be clear, I welcome sound proposals from Muslim as from other schools. If proposals for VA status from Muslim promoters come before me that meet the criteria, it is likely that I will approve them," said Mrs Shephard.
Akram Khan Cheema, the chairman of governors at Feversham, said he was extremely disappointed. He accepted that the Government is open to further applications and said that the school will be re-submitting within the next few weeks, after consulting the local education authority and the DFE.
Mrs Shephard has been markedly more encouraging towards Muslim schools than her predecessor John Patten. There is some private concern among liberal educationists that Muslim schools for girls will encourage traditional stereotypes, damaging the cause of equal opportunities. The majority of Muslim schools are all-female.
Advocates of Muslim schools say, on the other hand, that the national curriculum offers safeguards against discrimination.
Should permission be granted, there is no likelihood that other schools will rush forward with similar applications. Like the Brent Islamia school, Feversham College is unusually well-resourced. In order to qualify for VA status, schools must be up-and-running at an acceptable level before the state will consider paying for it.
The Brent school, founded and funded by Yusuf Islam, formerly pop star Cat Stevens, twice failed in its bid for VA status because the DFE believes that there are already too many surplus school places in the area.