The government must make major changes to the relationship between religion and schools, according to Charles Clarke.

The former Home and Education Secretary has produced a report with Linda Woodhead, professor of sociology of religion at Lancaster University, claiming that "the way in which religion is being dealt with in schools is not meeting the needs of our time".

Their recommendations, which feature in A New Settlement: Religion and Belief in Schools - a report launched in the House of Lords on Monday - include forming a national religious education council to advise on syllabus and changing RE to "religious, moral, ethical, social and cultural values".

According to Mr Clarke and Prof Woodhead, "such reform should better integrate RE and other elements of the curriculum such as PSHE, sex and relationship education, and education about values, and help 'de-exceptionalise' RE".

They also recommend abolishing the current statute for an act of collective worship, and instead leaving each school to decide the form and character of their school assemblies, as well as making more effort in "devising fairer admissions policies to faith schools".

Their report stresses that, while faith-based state schools should be available to all people in the local area,"families who are regular worshippers have a legitimate right to expect their children should have some priority in admission to schools which share their faith".

Ofsted, meanwhile, will undertake significant changes in the next school year, according to its chief inspector.

In reforms announced this week, Sir Michael Wilshaw said he plans to increase inspections to once every three years, typically over a one-day period.

"Short inspections will reduce the burden of inspection without losing the rigour which parents and the public rightly expect of Ofsted," he said.

Sir Michael added his intention to hold Ofsted to greater accountability and create a "scrutiny committee" in every region that will assess and rule on complaints made against inspections.