In the paper, ministers say they will welcome faith schools "with their distinctive ethos and character" into the maintained sector "where there is clear local agreement".

The details of the government's plans were made public as an Islamic charity announced proposals to build a girls' secondary school in Birmingham.

The school will be built using the Private Finance Initiative, whereby a building is constructed using private money and is then leased back to the state.

The charity - the Hazrat Sultan Bahu Trust - say the school will open in two or three years' time.

Publication of the Green Paper on education earlier this year led to a strong debate about the place of faith schools in Britain's multi-cultural society.

And the argument over proposals to increase the number of church schools became even more controversial because of the racial troubles seen this summer in Oldham and Bradford.

The product of a selective, faith-based, exclusive education system is graphically illustrated in Belfast - is this the extent of Tony Blair's vision for our secondary schools?

Phil Willis, Liberal Democrats

A report on Bradford was conducted by Lord Herman Ouseley, the former head of the Commission for Racial Equality.

It said: "There is a fear of confronting all-white and all-Muslim schools about their contribution, or rather the lack of contribution, to social and racial integration and segregation in schools..."

The Liberal Democrat's education spokesman Phil Willis has attacked the White Paper, saying it will encourage division.

He said: "We were promised a radical reform of our secondary education system and instead we have an ill-thought out set of structural changes that will encourage selection, division and social exclusion.

"More specialist and faith schools will, in effect, create a two-tier system whereby half of the nation's children will be barred from receiving additional resources.

"The product of a selective, faith-based, exclusive education system is graphically illustrated in Belfast - is this the extent of Tony Blair's vision for our secondary schools?"

Britain's first state-funded Sikh school is the Guru Nanak Sikh School in Hayes, Middlesex

The problems of balancing support for faith schools with the desire to create an inclusive society are also highlighted by the teaching unions.

Peter Smith, the general secretary of the Association of Teachers and Lecturers (ATL), said: "The issue of faith schools is not easy.

"We are wholly in favour of schools that reflect the ethos and beliefs of parents but are wholly opposed to institutional bigotry.�

"This balance is not easy to achieve as the disgraceful events in Belfast this week demonstrate."

John Dunford, the general secretary of the Secondary Heads Association warned: "Expansion must take account of the interests of other schools.

"Admissions policies must not endanger the development of an integrated multicultural society."

The Education Secretary Estelle Morris denied that the government's plans would foster sectarianism.

Estelle Morris: "We have a history of faith-based schools and many are inclusive"

She said bringing private faith schools into the state sector ensured that they taught the national curriculum and could be inspected by Ofsted.

She said: "We do have a history in this country of faith-based schools and many of them are inclusive."

She said many existing schools were not faith-based but were dominated by children from one ethnic background.

"Parents, if they want a faith-based education, will find one anyway and what we have at the moment is many schools in the independent sector from minority faiths," she said.

"I think bringing them into the maintained sector gives them a greater chance of being inclusive than it does if they remain in the independent sector."

Church of England

The White Paper says officials have "noted" a report by Lord Dearing for the Church of England, which recommends a big increase in the number of church secondary schools.

It says new church schools will be welcomed where there is local support but adds that such schools should serve the whole community and not just be open to Anglicans.

The paper said: "We want faith schools that come into the maintained sector to add to the inclusiveness and diversity of the school system and to be ready to work with non-denominational schools and those of other faiths."

The Conservatives have said the government should continue to encourage faith schools.

Their education spokeswoman Theresa May said: "Faith based schools have an important role to play in delivering this diversity.

"The government should pay no heed to those who argue that these schools are discriminatory."

The Church of England has welcomed the White Paper, saying increasing provision at secondary level would ease pressure on admissions.

Canon John Hall, the general secretary of the Church of England board of education, said: "The Church intends that its schools offer distinctively Christian education and are open and inclusive of those who seek such an education.

"Church of England schools are not divisive or sectarian.

"The overwhelming majority of Church of England schools closely reflect their diverse local community."