A bold new strategy for religious education in schools is needed after the July London attacks, a report says.
The Council says an inclusive approach to RE is needed.
The RE Council for England and Wales says the subject plays a key role in combating extremism and promoting respect for others.
Its report, sent to the government, also says despite the increasing popularity of the subject, teaching standards lag behind other subjects.
A "considerable budget" was needed for an effective strategy, it said.
But the RE Council did not call for a precise sum of money to be spent.
The Council report says that young people are continuing to explore the role of faith, and that there was a need to counter the "liberal and secularist assumptions that its subject matter is withering".
Our culture as a whole needs to recognise the seriousness with which Muslims treat their faith, or they will continue to feel alienated, it goes on.
Faith communities need to feel confident that their faith is being accurately and sympathetically portrayed, and there is a need to avoid "narrow and sectarian" teaching.
The number of students who took GCSE religious studies went up this year to 147,516, an increase of 4.6% on last year.
Chairman of the RE Council, Professor Brian Gates, said the proposals had the backing of all the council's professional associations, and all other faith communities and churches.
"We have a keen expectation that finally, the government will put its money where the rhetorical mouth is," he said.
The council's strategy document says the quality of education and training for teachers needed to be improved to stop RE being a "cinderella subject".
A major training programme should target secondary school teachers who do not have specialist knowledge and equip primary teachers who may have had little RE training.
Professor Gates went on: "It is a worry that there is minimal provision for RE in many institutions offering the PGCE.
"We are looking for a long-term strategy to replenish teachers with the competence and confidence to teach the subject," he said.
In his last annual report, published in February, Chief Inspector of Schools David Bell said religious education provision still compared unfavourably with other subjects despite some improvements in teaching.
He said the shortage of specialist teachers was more acute in RE than in any other subject.
Primary school teachers need better training, the Council says
The first national framework for teaching religious education in schools was announced by the then education secretary Charles Clarke last year. But it is non-statutory.
The Qualifications and Curriculum Authority framework, which covers education from three to 19, said pupils should study other faiths alongside Christianity to promote understanding and respect.
The RE Council said the future strategy for teaching should be rooted in this framework.
It recommends studying the tenets of the other five main religions - Buddhism, Hinduism, Islam, Judaism and Sikhism - across the school years up to the age of 14.
The RE Council said this framework was a "crucial foundation" upon which its strategy sought to build.