MUSLIM students will be offered loans that comply with Sharia law in a move that has been welcomed by Bradford Council for Mosques.

A new loan called a ‘takaful’ will be made available to allow Muslims to fund their studies without contravening their beliefs, MPs were told.

The money allocated - and the repayment amounts – will be equivalent to the set-up for all other students, who must pay university fees of up £9,000 a year

But the co-operative system will see repayments paid back into a communal fund and used to finance future students who choose to join it, so all members benefit equally.

That will allow those paying the tackaful to view it as a charitable donation – rather than a loan to be paid back with interest to a third party, which is prohibited by Sharia law.

Mohammad Saleem Khan, a spokesman for the Bradford Council for Mosques, said: “We very much welcome that the Government is going to do this, because it is a problem for Muslim students.

“There are many Muslims who have been unable to carry on with their education because they didn’t want to take out a loan with interest, which is against our religion.

“This is something we have written to the Government about. Muslim organisations have been working very hard so this will happen.”

However, the earliest the change can be introduced is 2016 and it could be later, because new legislation is needed.

One MP said ministers had pledged to act in 2011, adding: “We are now in 2014 and there is still nothing on the statute book to address this inequality.”

Universities minister David Willetts said the plan was being developed by experts in Islamic finance and had been provisionally approved by the Sharia Supervisory Committee of the Islamic Bank of Britain.

He said: “It would be a tragedy if any student, particularly a Muslim student, because of concerns about so-called interest rates, were put off from going to university.

“We are now indeed examining a Sharia compliant alternative to the conventional student loan.”

However, under pressure from a Labour MP, Mr Willetts denied there was any evidence of Muslims turning their backs on university because of the current, non-Sharia system.

He said: “We do not believe there is a disproportionate exclusion of Muslim students from university because of anxieties about the fees and loans system.”

The accusations of delay came from Simon Danczuk, the Rochdale MP, who said

legislation should have been introduced before the 2015 general election.

He said the problem had been made worse by the trebling of fees to £9,000 – a sum impossible for most families to find without a Government loan.

Mr Danczuk said: “Muslim people in my constituency are desperate to go to university and get the qualifications they need to get on in life.

“You can imagine their dismay when they find that the student loans on offer to help with astronomical university fees are not compatible with their religious beliefs.”