The council said the 600-place girls' school would take pupils out of unregulated, private Islamic schools where pupils do not follow the national curriculum and not all the teachers are qualified.
It added that the school would also welcome pupils of other or no faiths.
But CRE commissioner Khurshid Ahmed said a faith school was the "wrong approach" to take and the council should concentrate on improving standards in mainstream schools.
Ahmed, who is also chair of the National Association of British Pakistanis, said: "We would not approve of any separate development. We would want to see all children being taught together so we can get a sense of belonging and pride in being part of a multiracial nation."
However, current legislation allows faith schools so the CRE cannot block Blackburn's plan.
Peter Morgan, the council's director of education, said: "After extensive consultation, we believe this is the best way forward.
"Sixty per cent of our schools are Church of England and Roman Catholic faith schools but 30% of our school population is Muslim. So what you are saying is that Muslim parents don't have the same choice about where to send their children. Once you accept the principle of faith schools, there is very little argument against it."
The CRE's comments coincided with a select committee report on social cohesion that raised concerns that single-faith schools contribute to segregation.
And it comes just weeks after CRE chairman Trevor Phillips said multiculturalism now "means the wrong things". His remarks helped to fuel a media storm over a specialist housing scheme for elderly Asians, which was branded as segregation by several tabloid newspapers (HT 7 May, page 18).
The school would require an initial investment of about £10m and would be England's fifth state-funded Islamic school.
The plan is part of Lancashire's £150m Building Schools for the Future bid to the Department for Education and Skills.
The bid is on the reserve list for the £2bn school building programme and is expected to get funding in the next round.
The bid also includes plans for a 1600-place city academy for 11- to 18-year-olds in Darwen. It would be part-funded by a £2m donation from Rod Aldridge, executive director of outsourcing firm Capita.
Aldridge could not be contacted at the time of going to press.
The local pathfinder, Elevate East Lancashire, is understood to be negotiating with Blackburn council about how it can link up with the school plans.
Source
Housing Today
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