The government has said that it will not scrap the cap on religious-based admissions to new free schools but will instead provide funds for local authorities to create a new generation of "voluntary-aided" faith schools.

In an interview with BBC Radio 4’s Today programme education secretary Damian Hinds said: "We reflected long and hard on these difficult issues... we have concluded that it is right that we continue to have that cap."

The cap on free school faith admissions means that these new faith-based schools can only allocate 50 per cent of places on grounds of religion, a move which has been widely criticised by religious leaders.

Mr Hinds said the new policy would "give parents greater choice" as local councils will be allocated funds to open voluntary-aided faith schools with 100% faith-based admission where there is the demand.

Chief Rabbi Mirvis "welcomed" the initiative, saying: 

“I have long argued that there is no inherent contradiction between a school with faith based entry criteria and a school which champions British Values and respect for people of all backgrounds. Today’s announcement is an extremely positive development. By allowing, once again, the establishment of voluntary-aided schools without any cap on faith based entry criteria, the Government has strongly endorsed that view.

"As things stand, demand for an immersive Jewish education at both Primary and Secondary levels is being met by our existing, outstanding schools but the news that in future, this voluntary aided option will be available to us, should the need arise, will be welcomed warmly by the vast majority of our community.”      

Rabbi David Meyer, executive director of PaJeS, said: "We warmly welcome the announcement of new government funding to create voluntary aided Jewish schools. 

"PaJeS has worked with the government extensively over the last two years to address concerns over the future of faith schools, whilst reconciling the government’s need to promote inclusivity and tolerance in accordance with British values.

"The announcement represents a huge success for our efforts on behalf of the Jewish community and is the result of extensive government consultation with us to help navigate a solution to the future of faith schools."

However, Jonathan Arkush said that the Board of Deputies was "disappointed" by the announcement.

He said: "We are disappointed that the Government has gone back on a manifesto commitment to drop the 50% cap on faith-based admissions for new free schools of a religious character. Whatever the intentions behind it, and while the cap does have some supporters in our own community, the 50% cap has not been proven to promote cohesion in practice.

“We have long argued that there are better ways to promote cohesion and that these should be considered instead.

“The popularity of faith schools with parents reflects their academic results, ethos, behavioural standards and the contribution that their pupils go on to make in wider society. It is no accident that one in every three schools in Britain is a faith school."

The Department for Education said: "There are many good or outstanding faith schools and more want to open. The Government will retain the 50 per cent cap on faith admissions for free schools but will develop a scheme to help create new voluntary-aided (VA) schools for faith and other providers to meet local demand, supported by capital funding. The VA route already allows for schools to apply to open with up to 100 per cent faith based admissions.”

In last year’s election, the Conservatives promised to remove the cap.