The teaching of Islam in English universities is based on "out-of-date and irrelevant issues", a government commissioned report has concluded.
More funding will allow imams to be trained in the UK
Academic Ataullah Siddiqui's review paints a picture of Islamic studies departments where the post-9/11 and 7 July world has largely passed them by.
It argues that more emphasis should be placed on Islam in a modern context.
Ministers will now label Islamic studies a "strategic subject" because of its role "in preventing extremism".
The review was commissioned by the DfES to assess the way in which Islam is taught and to improve support and advice available to Muslim students.
It was published as Tony Blair prepared to give a speech on Islam and the importance of British Muslims in London.
Higher Education Minister Bill Rammell said the review provided a helpful contribution to a particularly complex and sensitive subject.
"The effective and accurate delivery of Islamic studies within our universities is important for a multitude of reasons including wider community cohesion and preventing violent extremism in the name of Islam," he said.
This was why an extra £1m was being invested in the training of imams and why Islamic Studies was being designated a "strategic subject", he added.
A strategic subject is one where it is in the national interest to safeguard research and graduates with the right knowledge and skills.
Science and engineering subjects are designated strategic subjects.
Mr Rammell added that Dr Siddiqui's review, as well as other reports and conferences on Islam in higher education, suggested Islamic studies departments were concentrating too much on a Middle Eastern focus and ignore the realities of Islam in modern multi-cultural Britain.
The DfES cannot say how many people are studying Islam at university, but currently there are 44 higher education courses with Islamic studies in the title being taught.
Spokesman for the Federation of Student Islamic Societies Faisal Hanjra said the government were wrong to try to use the teaching of Islam as a tool to deal with extremism and radicalisation.
He said: "The vast majority of Muslims don't learn their Islam from universities, they learn it from the imams in their local communities.
"There's no evidence at all to suggest that students are being radicalised or anything of that nature."
Monitoring Muslim students
In his report, Dr Siddiqui says discussion about the teaching of Islam in higher education has been conducted "in complete ignorance of the Muslim community and their patterns of belief and practice".
He also says that "a major shift of focus" from "an Arab and Middle Eastern perspective to that of a plural society in Britain is needed".
The report concludes that Islamic studies syllabuses should focus on aspects of Islam "relevant to contemporary practice of faith".
Students should be able to learn parts of the syllabus from Islamic scholars, it adds.
It also calls for more recognition of the importance of campus Islamic societies and more prayer facilities.
The publication of the report comes after a unanimous vote by the University and College Union last week urged lecturers not to meet government demands to inform on pupils suspected of extremism.
The government had asked lecturers to monitor the activity of Muslim students and to report any suspicious behaviour.
Education spokesman for the Muslim Council of Britain Tahir Alam said he did not agree that Islamic studies were being taught with a complete disregard of modern events.
"There has been a trend that the subject is taught as a foreign element and it is also important that it is taught a domestic element as well," he added.
President of the vice-chancellor's group, Universities UK, Professor Drummond Bone said it will be for the relevant academic community to debate any future changes to the teaching of Islamic studies.
But he added: "It is important that all academic disciplines follow the normal quality procedures which ensure critical intellectual rigour and openness."