Many more new faith schools could be opened in England following a relaxation of selection rules for new pupils, according to a BBC report.
The proposals are expected to be in a government green paper released today.
A Downing St source told the broadcaster the cap on faith schools admissions, that restricts them to taking only half their intake on the basis of faith, had failed.
The source said: "It has failed to make minority faith schools more diverse, because parents of other religions and none do not send their children to those schools.
"But it has prevented new Catholic schools from opening, which are more successful, more popular and more ethnically diverse than other types of state school."
The source added: "We're going to change the rule, so we can allow new Catholic schools to open, while making faith schools of all kinds do more to make sure their pupils integrate with children of other backgrounds."
A spokeswoman for the Catholic Education Service said it welcomed the move.
"This will enable the Catholic Church to meet the current parental demand for thousands of new Catholic school places across the country," she said.
The proposal, which will be fiercely resisted by humanist groups, comes alongside even more controversial plans to reintroduce grammar schools providing a selective state education for bright children. No new grammar schools have been opened since the Tony Blair government banned the practice. They are widely held to be socially divisive, favouring the children of rich parents who can afford to have their children tutored to pass the 11 plus exam, though government proposals are expected to seek to address these fears.