Academics have warned against the government tying its extra funding to improve Islamic studies teaching and research too tightly to the recommendations in the recent Siddiqui report.
The Siddiqui report, published earlier this month, said that university courses should focus less on the Middle East and more on the realities of life in Britain.
The higher education minister, Bill Rammell, announced that the higher education funding council for England (Hefce) would get £1m to develop a long-term project to address gaps in Islamic studies teaching and research. Hefce said it would reply to the recommendations this autumn.
But Robert Gleave, executive director of the British Society for Middle Eastern Studies and Arabic studies professor at Exeter University, warned against a "rush job" in response to the Siddiqui report.
"The report mixes up specific care for Muslim students with the teaching of Islamic studies. If that's the basis on which money is distributed then there's reason to be concerned," he said.
"We do need more research into British Islam and we do need it to be part of Islamic studies curricula in universities but it's best understood within the context of the Muslim world generally, and the indications of the report are that [Dr Siddiqui] recommends that British Islam can be treated in isolation. It can't."
"If the point is to produce future generations of Muslim leaders, that's a completely different purpose to Islamic studies in universities where the aim is not religious engineering, which the government seems to think is a good idea, ie to get lots of Islamic studies departments to encourage one sort of Islam and discourage another.
"That's not the aim of academia. It's not our job to try and tell them what to think. We have academic standards that we are very loathe to compromise on.
"You don't ask a Polish department to solve the problem of the numbers of Polish immigrants in the UK. It wouldn't be the natural place to go," he said.
Experts in Islamic studies comment on and analyse movements in the Islamic world, rather than attempting to change opinion to suit government tastes, said Prof Gleave.
"This £1m smells of another stop-start investment geared for a specific aim rather than the subject area in general. As someone who teaches Islamic studies, I welcome the money but it's not good for the long-term development of the subject.
"You can't just create [scholars] overnight by heaping money into a particular topic or research or education that's deemed relevant at this point in time. You need investment in an academy of scholars."
Prof Gleave sees research into the anthropology of Muslim communities as a priority. Fee waivers would encourage postgraduate researchers put off by raised tuition fees.
Research into understanding the ideology and theology with Islam and the transition from the pre-modern to the modern period and language training is also important, he said.
"You need to train people to read Arabic sources with complex religious doctrines to place modern debates in an historical context."
Sophie Gilliat-Ray, director of the centre for the study of Islam in the UK at Cardiff University, will not see any of the £1m. But she agreed that bursaries for students are crucial.
"I have excellent scholars who really struggle to develop academic careers because of a lack of money. Three or four bursaries would make such a difference," she said.
Dr Gilliat-Ray revamped the Muslims in Britain research network in 2003 into a professional academic association.
"The group is really flourishing now and we have young scholars coming through and a better balanced research field so the prospects are really promising the but the money is really tight," she said.
The depth and range of the British Muslim experience has not been captured by the "quick and dirty" studies carried out in the aftermath of the July 7 London bomb attacks, she said.
Her centre runs a popular masters course on Islam in contemporary Britain, which helps students hone their research skills.
"A lot of research is done by scholars outside of Islam and we need a more balanced research field by Muslims themselves from an inside perspective," she said.
"We have something here that is an applauded example of the kind of teaching and learning about Islam that should be going on. It would be nice to see some money coming our way because it has been such a struggle."
Gavin Picken, lecturer in Islamic studies at the School of Oriental and African Studies, said: "I'm not sure what the government is expecting to achieve but there seems to be a general notion that there are Islamists everywhere trying to infiltrate the system. It's simply not true. We are just academics like everyone else dealing with a unique field.
"Where does our academic credibility for being unbiased end up? The government can't impose on us how to teach Islamic studies.
"We know how to teach it, we need financial support for students and posts. If you don't have posts in institutions teaching the subject then it will not be taught," he said.
For Haifaa Jawad, senior lecturer in Islamic and Middle Eastern studies at Leeds University, £1m is too little.
"It's better than nothing but £1m will not do that much especially if the government is trying to target people so they have some loyalty or to create political stability."