Two new faith schools in London could be allowed to restrict 90% of their intake to Catholic students - undermining a coalition deal which agreed only 50% of intake could be based on religion.
The British Humanist Association reported that Business Secretary Vince Cable sent an enraged email after direct intervention from Michael Gove in two schools in Cable's Twickenham constituency, to ensure they can select almost all of their pupils based on their faith.
The move is a direct contradiction of the 2010 coalition deal on faith schools agreed by the Lib Dems and the Conservatives.
School selection based on faith is not a popular move with the British public
According to a recent ComRes poll, commissioned by the Accord Coalition, 73% of the British public believe "state funded schools, including state funded faith schools, should not be allowed to select or discriminate against prospective pupils on religious grounds in their admissions policy".
The intervention by Gove has caused outrage from anti-faith school campaigners. A third of state-funded schools in England and Wales are faith-based.
Andrew Copson, chief executive of the British Humanist Association, said in a statement: "Before the general election, the Liberal Democrats’ policy was the most in tune with public opinion on the issue of state-funded religious schools.
"Those principles were diluted in the Coalition Agreement, and now even that seems to be unenforceable.
"We would urge other politicians who support inclusive schools to join Dr Cable in urging Michael Gove to reverse his position, and do what he can to rectify the damage done by his Department’s support for new schools with 100% religious admissions."
Rabbi Dr Jonathan Romain, chair of the Accord Coalition which campaigns for inclusive education, said in a statement: "Children should not be selected by schools according to faith.
"It is highly discriminatory and sends a terrible message to the children themselves about the sort of society we are trying to create.
"It also begs questions about the core values of any faith that wants to shut the doors on others. Britain today is multi-belief, but we don’t want that to become a multi-fractious society.
"State funded schools should not help to segregate and entrench religious division, but should instead be open to all children, regardless of religion or philosophy.
"We therefore call on the Government to fulfil its commitment to facilitate inclusive admissions policies. Schools’ conduct should be exemplary, and religious discrimination should form no part of their life.’"
The local spat in Richmond has become a matter of deep coalition tension since Cable wrote an email to education minister David Laws, copied to Nick Clegg, saying: "A serious problem has arisen whereby DfE officials, in evidence to a court case, appear to be acting in contradiction to the coalition agreement in relation to faith schools and contrary to the express intention of the Education Act 2011.
"Can you intervene with the department to rectify this situation?"
A campaigner, copied into the email, passed it on to the BHA.
The two schools are voluntary-aided Catholic schools, a primary and a secondary, and were given £10m land and assets by Richmond council.
If voluntary-aided schools like this are oversubscribed, 90% of places can be allocated to applicants of a particular faith, according to whatever is the school's ethos.
But local anti-faith school campaigners argue that under 2011 Education Act, new schools must first seek to set up an Academy - and the provision in that law means only 50% of applicants can be based on faith, something Lib Dem MPs insisted was included.
But Gove allegedly insisted, before a judicial review into the school was about to commence, that the schools in Richmond were not obliged to establish themselves as Academies, and therefore could take 90% of pupils based on their Catholicism.
In the high court, Mr Justice Sales rejected the campaigners' application and the schools permission to proceed.