Britain has become "institutionally Islamophobic", according to a report by a group promoting racial justice.
Advisers say more needs to be done to help Muslim communities
The Runnymede Trust's Commission on British Muslims and Islamophobia said Muslims were being "demonised" and little was being done to help them.
Spokesman Imam Sajid said the situation seemed to have deteriorated since a previous study in 1997.
"We need action in employment, education, policing, legislation, media and many other areas," he said.
Targeted at central and local government, voluntary and private bodies, the 1997 report put forward 60 recommendations.
But a follow-up document to be released on Tuesday found little positive action had been taken.
"In 1997 we were given a promise that within a few years religious discrimination would be outlawed, diversity and plurality would be part of life and no sections of the British community would be excluded," Mr Sajid said.
But he said local authorities had "done nothing" since then to tackle issues such as power sharing, "resource sharing", consultation, or inclusion in race equality schemes.
Muslims as a whole were being blamed for the acts of a few, he said, adding: "That's called an institutionally Islamophobic society".
He pointed out that the unemployment rate across Muslim communities was currently 15% while for the population in general it was 1%.
"In a few places changes have been made but good practices in one part of the country are not being practised in other parts of the country.
"Where I live local authorities refuse to recognise religious hate crimes while the Metropolitan Police in London are actively monitoring and even reporting to the Safety Forum such crimes.
"Why aren't these things being done collectively and in a co-ordinated way?"