The Government has been diverting state funds towards Muslim groups and away from Christian groups wanting to help the poor, the Church of England General Synod has heard.
A report endorsed by the Archbishop of York says the Government has become “unbalanced” in its approach.
It blames political correctness and fears about Islamic extremism for ministers’ preoccupation with funding Muslim groups.
The situation has left churches challenged to maintain their presence in poorer areas, the report warns.
The report, co-authored by Rt Revd Stephen Lowe, Bishop for Urban Life and Faith, says there is a “great deal of inconsistency in the way individual [Government] ministers deal with religious groups”.
It continues: “Christian groups in particular have suffered irrational prejudice against their funding applications and a lack of understanding of the nature and sometimes fragility of the local church.
“There is a perception, perhaps justified, that it has been easier for Islamic groups to receive financial support than other faith groups.”
Bishop Lowe said the Church of England had applied to the Department of Communities and Local Government for money to “enable us to support parishes”.
“It seems as if political correctness by Government may defeat us,” he said.
Earlier this year it was revealed that Muslim groups in Scotland had been awarded more ‘equality’ funding than all other religious groups put together.
The Equality Unit gave Muslim groups £1.5 million of public money, compared with £137,500 given to Christian charities and £110,000 given to Jewish organisations.
In the same month it was reported that £25,000 from a special Government fund set aside for ‘building faith communities’ had been allocated to the anti-religious British Humanist Association (BHA).