Islam is so unreformed there have been no real advances in art, literature, science or technology in the Muslim world in 500 years, Lord Tebbit says.
Lord Tebbit caused controversy with his 'cricket test'
The ex-Tory chairman also told the e-politix website multiculturalism was in danger of undermining UK society.
In the 1980s he questioned the loyalty of immigrants who backed cricket teams from their countries of origin.
He says if he had been heeded it might have stopped the London bombings. A key Muslim group said he was "misguided".
"To reduce the terrorism problem to simply blaming multiculturalism is blinkered and indeed dangerous," a spokesman for the Muslim Council of Britain said.
He added it was true science had not made the progress in the Muslim world that it has in the West.
"I do not believe this is due to Islam but instead due to a restrictive interpretation of the faith by too many Muslims."
"When it comes to art and literature, Lord Tebbit is completely wrong - there is a vibrant arts scene in many Muslim countries. He would recognise this himself if he understood Arabic or Persian or Turkish or any of the many languages in the Muslim world."
In his interview, Lord Tebbit said the 'cricket test' was a means of gauging whether a community had integrated.
"If a community was looking back at where it had come from instead of looking forward with the people to whom they had come to, then there is going to be a problem sooner or later."
Lord Tebbit said multicultural society was "an impossibility" because if there were two cultures there would also be two societies.
"A society is defined by its culture. It is not defined by its race, it is not a matter of skin colour or ethnicity, it is a matter of culture.
"If you have two societies in the same place then you are going to have problems, like the kind we saw on 7 July, sooner or later," he said.
He warned London was "sinking into the same abyss that Londonderry and Belfast sank".
On Islam holding back progress Lord Tebbit said: "The Muslim religion is so unreformed since it was created that nowhere in the Muslim world has there been any real advance in science, or art or literature, or technology in the last 500 years."