The Government has promised to remove "unnecessary barriers" for religious groups that want to provide state education.
In a new joint document launched today, the Department for Children and some religious groups including the Church of England set out to "dispel some of the common myths and misunderstandings around faith schools".
However the plans have been criticised by teachers, and others who feel that taxpayers should not fund schools which operate policies which discriminate on the basis of religion.
The document says: "The Government and faith school providers believe that all schools - whether they have a religious character or not - play a key role in providing a safe and harmonious environment for all in our society, thereby fostering understanding, integration and cohesion.
"The Government recognises that, in relation to the overall size of their populations, there are relatively few faith school places in the maintained sector available to Muslim, Sikh and Hindu children compared to the provision available for Christian and Jewish families."
More than 100 independent Muslim schools could apply to join the state system while the Government acknowledged that there were not enough free school places for Hindu and Sikh children.
There were 376,000 Muslim children aged between five and 15 at the last census, but there are only 1,770 pupils in the seven state-funded Muslim schools in England. There are also 115 independent Muslim schools, where families have to pay fees.
The document, Faith In The System, states: "The Government will work with local authorities as the commissioners of schools and school places in each area and with faith organisations to remove unnecessary barriers to the creation of new faith schools. In particular, the Government will encourage independent schools to enter the maintained sector in their existing premises so that the need for capital funding is not a barrier to entry."
Where there are no existing buildings which can be used, the local authority or the Department for Children, Schools and Families could provide cash to buy or build new premises, the document said.
The document was backed by the Department for Children, Schools and Families, the Association of Muslim Schools, the Board of Deputies of British Jews, the Church of England Board of Education, the Hindu Council UK, the Catholic Education Service and the Network of Sikh Organisations, among other groups.
But teachers attacked the plans and questioned whether any religious groups should receive Government funding to run faith schools.
Mary Bousted, general secretary of the Association of Teachers and Lecturers, said school staff were concerned over the way they operate.
"We question whether faith schools, particularly those where staff and children are chosen on a faith basis, provide an environment for 'interaction between different faiths and communities'," she said.
"And we question why schools, in which the majority of funding comes from the state, should, as the Government proposes, nurture young people in a particular faith.
"Surely, the job of schools is to nurture children and young people as individuals and as responsible and compassionate global citizens, and the promotion of a particular religious viewpoint should remain the province of religious groups. Our members believe that we need schools which embrace the diversity within our community, not a diversity of schools dividing pupils and staff on religious grounds."
Dr Bousted said the union reserved the right to challenge the "restrictive admissions, employment and curriculum practices operated in many of this country's faith schools".
These practices were "made possible due to preferential legislation which does little to promote equality of provision across the school sector".
She dismissed the argument that reservations over faith schools are based on "common myths and misunderstandings" and suggested that recent research has linked them to segregation.
Ministers want faith groups to have a bigger role in state education, and have encouraged them to run privately-sponsored academies and to support the new breed of trust schools.