There are approximately 120 Muslim schools in England, but only a fraction are currently funded by the taxpayer.
The first state Muslim schools were created in 1998 and there are now five that are government-funded - with voluntary-aided faith school status.
Another three Muslim state schools have been approved, and will open soon.
Under a programme launched last year to bring more private faith schools into the mainstream, the number is likely to grow extensively over the next decade, although considerable work is needed to achieve the aim.
A report by the Association of Muslim Schools, which was commissioned by the Government, says "very few" of its teachers hold Qualified Teacher Status, only a quarter cater for pupils with special needs and playing fields are "sub-standard" in most schools.
Nevertheless, the AMS identified 29 schools that are best placed - based on the condition of buildings, curriculum and quality of teaching - to move into the state sector. That list has now been cut to seven and, pending further consultation with ministers and local authorities, these should become state schools in September 2007.
The schools are: Al Noor primary in Redbridge, London, Bolton Muslim girls'
school, Islamiyah school in Blackburn, Leicester Islamic primary, Madni girls' high in Dewsbury, Madani girls' secondary school in Tower Hamlets, London, and Orchard primary in Lambeth, London.
All the schools are academically successful and most are for girls, reflecting the demand among Muslim families for single-sex education.
Dewsbury's Madni girls' school was founded in 1986 and charges, like most private Muslim schools, pound;1,000 a year. This is considerably less than the pound;5,000 per pupil it can expect from the taxpayer.
Ishak Choudry, chair of governors, said the school, where more than 70 per cent of pupils got five Cs or better at GCSE last year, did not need refurbishment or building work to meet state standards.
He also said that pupils of other faiths apart from Islam would be admitted.
"Because we have a Muslim name people assume all our pupils are Muslim but they don't have to be," he said. "Anybody can send their girls here so long as they follow the rules."
Bolton Muslim girls' school, has a similar intake and level of academic achievement.
Idrish Patel, its head, said the girls would get a better education in the state because they would be entitled to the national curriculum. At present, the school does not run in the afternoons as it would mean higher fees for parents - but the extra lessons would be free it if became a state school.
Mr Patel said: "If we move into the state sector we will get the chance to brush shoulders with other schools and share expertise. We would be much more integrated."
Someera Butt, head of Al Noor school, said: "I understand where people are coming from when they say single faith schools segregate but childrenneed a grounding in the beliefs of their families and backgrounds to help develop their personalities and then they can integrate. "The important thing is that people have a strong sense of identity and faith schools are fantastic for that."
Muslim leaders hope more schools will transfer into the state sector.
Islamia girls' high, Huddersfield, praised by Ofsted last year for producing "responsible British citizens confident in their Islamic identity", is among them.
Samira El Turabi, headteacher, said: "Our pupils are all citizens of this country and they need to understand the world around them. We are not about segregation at all."