Schools are a "ticking time bomb" of growing racial segregation waiting to explode, the race watchdog has claimed.
Some 90% of pupils were from ethnic minorities in some schools
Britain risks becoming a "mini America" dominated by racially determined schools, Commission for Racial Equality policy director Nick Johnson warned.
Those schools with more control over their admissions selected advantaged white, middle-class pupils who were more likely to succeed, he claimed.
The government said schools were required to promote community cohesion.
Speaking at a segregation seminar, Mr Johnson said research suggested it was increasing in schools and called for urgent action to reverse the trend.
Steps could include offering cash incentives to encourage schools to take more ethnic minority pupils.
Mr Johnson added: "If a Muslim child is educated in a school where the vast majority of other children are also Muslim, how can we expect him to work, live and interact with people from other cultures when he leaves school?
"This is a ticking time-bomb waiting to explode."
The CRE was particularly concerned about Academy schools and those with Trust status, which had different entry procedures to other state schools.
'Education by ethnicity'
"Some are using this position to cream off pupils from certain ethnic backgrounds or religions, thus reducing interaction and increasing racial tensions," Mr Johnson claimed.
"If schools are judged solely on the academic results of pupils, it's hardly surprising that they are selecting white, middle-class pupils, who have more opportunities and are more likely to succeed.
"This is creating a culture of 'education by ethnicity'," he added.
Research for the CRE looking at 25 local authority areas, suggests 40% have high levels of segregation, with the remaining 60% having moderate levels of segregation.
Segregation in schools was very much linked to the residential segregation of the area in question, the research - mainly based on the 2001 national census results - found.
In the areas found to have the highest levels of segregation, Birmingham, Blackburn and Bradford, between a half and two-thirds of ethnic minority pupils attended schools where they formed 90% of the pupils.
The CRE suggested one way of addressing the problem was by asking schools applying for Trust status to have "a balanced and diverse intake".
"This would mean that schools would be financially rewarded for taking in more pupils from ethnic minority backgrounds. Limited research has shown that this has had some success in the US."
He added: "Another solution would be for schools to widen their catchment areas in order to take in pupils from a wide range of backgrounds.
"School authorities and parents must also play a role in ensuring that our schools are as racially mixed as possible."
A spokeswoman for the Department for Education and Skills said: "The Education and Inspections Act 2006 placed a new duty on the governing bodies of all maintained schools, including but not limited to faith schools, to promote community cohesion."
She added that Ofsted inspected Academies and Trust schools in exactly the same way as other state schools - this included an assessment of their contribution to community cohesion.
"Ofsted already inspects the contribution made by all schools to the well-being of pupils."