The first Islamic city academy is being planned in Bradford and Muslim businesses and community groups are being urged to consider funding others around the country.
Yusuf Islam, the singer and Islam convert formerly known as Cat Stevens, has already been informally approached about sponsoring an academy, but has yet to confirm his interest because of his commitments to other Islamic schools backed by his charities.
Muslim leaders are hoping new faith sponsored academies could provide an escape from low-achieving comprehensive schools for thousands of Muslim children.
Discussions were held this week between Government officials and several wealthy businessmen, educationists and local Muslim community groups in Yorkshire about backing the project.
The private sponsors of the proposed Islamic academy, likely to be a collective of several interested parties, could influence the school's curriculum and selection procedures. Academy sponsors have to find an initial investment of around pound;2 million; the Government provides pound;20 million set up costs, plus running costs.
It is not known yet which school could beome the new academy, but Bradford has been targeted as low performing area educationally that would benefit from the introduction of academies.
In England there are around 7,000 faith schools, 6,955 of them are Christian backed, 36 Jewish, five Muslim and two Sikh, although 120 Islamic independent schools are considering opting into the state sector. There are nine academies backed by Christian organisations with more due to open.
"Less than 1 per cent of Muslim children are taught in faith schools compared to a third of Christians," said Tahir Alam, chairman of the Muslim Council of Great Britain's education committee.
"In Bradford, the appalling levels of under-achievement need to be addressed. The most important issue is education and if the faith schools can generate an ethos where the students can flourish then that is good.
"The investment requires a lot of money and academies are being backed by multi-million pound organisations. Quite frankly, the Muslim community is not that rich but if academies are the answer then I would encourage people to show faith and support this if they can."
Following the July 7 bombings in London, a survey showed that 64 per cent of the public opposed the expansion of faith schools.
Phil Thornton, chairman of Bradford's Young People and Education Improvement Committee said: "I don't think polarisation of religious groups generally is a good idea and we should work more towards integration."