A national body to set standards for Imams in British mosques may be formed in the wake of the London bombings.
Charles Clarke flanked by Abdal Ullah (l) and Lord Ahmed
Top Muslim thinkers have told ministers they need a body to help British-born Muslims to become faith leaders.
They also plan a national roadshow of influential Islamic thinkers to challenge extremist thinking.
Welcoming the plans, Home Secretary Charles Clarke gave the strongest indication yet there would be a public inquiry into the 7 July attacks.
The Home Office launched a massive consultation of British Muslims in the wake of the bombings, seeking a national debate on what was behind the events.
Announcing the proposals, which include a national forum on tackling extremism and Islamophobia, Home Secretary Charles Clarke said he broadly supported the package and would earmark some £5m over the next 18 months to pursue the plans along with other faith initiatives.
The package of measures came out of a series of workshops among 25 Muslim leaders - and meetings between ministers and communities around the country.
Labour peer Lord Ahmed, a member of the working groups, said the proposed national body for Imams would play a key role in raising a generation of home-grown religious leaders, people best placed to balance a Western life with Islamic traditions.
"For the first time we've had a debate in the Muslim community and in the mosques with the imams.
"They know we can't continue to deliver sermons in Arabic and you can't exclude youths and women from mosque committees. I hope we will work to try to improve the situation."
Muslim opinion has been divided over the working groups, with some saying that some of the participants had no credibility within communities - and that it has been expected to come up with proposals despite nobody fully understanding the motivations of the bombers.
Separately, the Home Office is proposing to form a broader body to look at how best to unite different communities in the UK.
MUSLIM WORKING GROUPS
Role of women
Imam training and accreditation
Muslim leaders said they had raised community concerns about foreign policy clearly with ministers, saying the government had to recognise that issues such as Iraq and conflict in the Middle East played a role in inflaming public opinion.
The working group members stressed they believed a public inquiry into the bombings was essential to understanding why they happened.
Mr Clarke said: "On the public inquiry, of course there will be an inquiry. There is no question about that. The issue is the nature of the inquiry. We have not ruled out a public inquiry.
"We are ready to look at it but I want to consult with colleagues in Parliament before we decide what to do in that area."
Abdal Ullah, the youngest member of the Metropolitan Police Authority and chairman of the working group on Muslim youth, said there was strong support for a national road show of leading thinkers.
"What we see us doing is setting up a national campaign where we invite leading scholars that British Muslims identify with, who speak their language and understand what it's like to be young, British and Muslim, to do a tour of the UK.
Among the proposed speakers would be Tariq Ramadan, an influential Swiss academic who advocates western Muslims splitting from the east, and Sheikh Hamza Yusuf, an American preacher who has advised the White House and packs conferences on speaking tours.
Shereefa Fulat, director of Muslim Youth Helpline, a charity that counsels young people, said: "It is important that we do more as a community - in partnership with the Government - to develop opportunities for young Muslims to be leaders and active citizens.
"These proposals represent the start of a long process of dialogue that must have Muslim youth at the forefront".