The plan, called "Project Contest," is the creation of top cabinet officials and was supervised by Andrew Turnbull, a close adviser of British Prime Minister Tony Blair.
"The Sunday Times" on 30 May called the plan "one of the most ambitious government social engineering projects in recent years."
The newspaper article, which for the first time makes public details of "Project Contest," says the plan is based on a confidential study of Britain's Muslim community by Blair's strategy unit.
The study's findings were bleak. It found that Muslims are three times more likely to be unemployed than other residents. Muslims are also less qualified for employment and more likely to live in low-income districts.
The study concludes the situation is a fertile recruitment pool for militant Islamists. It says there may be between 10,000 and 15,000 British Muslims who actively support Al-Qaeda or other extremist groups.
Mohammad Anwaz is a professor at Britain's University of Warwick. He declines to comment on the government project, but says he welcomes any plan that would help improve the situation of the country's Muslims.
"Researchers like myself have pointed out that Muslims are one of the most disadvantaged communities in this country in terms of socio-economic position, and [we have looked for] anything which could help to improve this situation, in terms of educational achievement, to deal with the high level of unemployment, and obviously the harassment and attacks on Muslims. So, if there is something to improve those situations, I think that should be welcomed," Anwaz said.
Inayat Bunglawala is the spokesman for the Muslim Council of Great Britain. He says the government report gives an accurate depiction of the way many Muslims live -- particularly the younger generation, whom he says are growing increasingly alienated from British society.
He adds that in many cases, Muslim families are plagued not just by economic disadvantages, but political ones as well.
"Also, they feel they are voiceless, that their opinions are not being taken on board by politicians. So it is important that the government now begins to listen to the Muslim community, and take on board their concerns, if we are to deal with this whole problem of marginalization," Bunglawala said.
In attempting to determine how potential militants are recruited from the Muslim population, the government plan focuses on the country's Islamic spiritual leaders.
"The Sunday Times" reports the government hopes to support the work of moderate clerics while barring entry to radical foreign imams or extraditing those already in the country.
At the same time, the study notes that the government should play a greater role in cultivating young Muslims with future leadership potential. Such steps would be part of Britain's long-term antiterrorism strategy.
But can the government really make a significant difference in the lives of young British Muslims? Bunglawala says he has doubts -- particularly because he does not believe Muslim leaders will accept state interference in religious affairs.
"If the government is intending to follow the French model, which is to impose leadership on the Muslim community, and have government-approved imams teaching in mosques, then yes, that would be social engineering, and that would be very firmly rejected by the Muslim community. It depends on how the government approaches this problem -- whether they want to force a solution on the Muslim community, or work with the Muslim community, to address the longer-term issues," Bunglawala said.
Bunglawala also suggests the government has already erred in keeping "Project Contest" a matter of such great secrecy. If anything, he says, officials should have consulted with the country's Muslim leaders as much as possible -- particularly because of rising debate over the ongoing war in Iraq.
The government has not yet reacted to "The Sunday Times" article.