By Caroline Wyatt BBC Paris correspondent

Sarkozy would rather see Muslims in mosques than basements

In his book, The Republic, Religions, Hope, Mr Sarkozy says it is time for the 1905 secularity law to be updated.

He says extremism in France is festering in underground mosques and Islamic groups do not have enough money to build places of worship.

His comments have unerringly hit the headlines again, with a call that touches a raw nerve in France.

How to integrate the nation's five million Muslims, and stop what some see as growing fundamentalism among young Muslims here, are among the most difficult issues facing France today.

The finance minister's idea of giving state funding to mosques would involve a change to the 1905 law, separating religion and state and guaranteeing the secular state that many here cherish.

Leadership bid

That decree was recently bolstered by a controversial new law, banning religious symbols in schools, which applies to all religions but was mainly aimed at preventing young girls wearing the Islamic headscarf to class.

Mr Sarkozy says that unlike Jews and Christians, Muslims are relatively new to France, and that Islam needs a helping hand.

The danger for France, he says, is not more minarets, but Muslims being forced to worship in basements or garages that keep clandestine or fundamentalist groups hidden.

Mr Sarkozy's headline-grabbing proposals in the book published on Thursday, come just before he takes over the leadership of President Jacques Chirac's ruling UMP party next month - when he will have to give up his ministerial post.

Mr Sarkozy makes no secret of his presidential ambitions and could be one of Chirac's main rivals in the 2007 elections, in which integrating Islam in France could be a key issue.