Two million Muslims now live in Britain and 10,000 are millionaires, reveals Home Secretary Jacqui Smith during visit to Pakistan

The milestone total includes 10,000 millionaires, she said during a visit to Pakistan to discuss counter-terrorism.

It means the Islamic population in the UK has increased by 400,000 since the 2001 census - adding more than 50,000 to the total each year.

Miss Smith told the Pakistan National Council of the Arts: "After Christianity, Islam is the largest faith community in the UK.

"1.6million declared themselves Muslims in the 2001 census, and that figure may now be as high as 2million. Islam is one of many faiths which are practised in UK communities.

"We are proud to live in such a diverse country.

"Muslims play a full and active part in British society: in politics, from Parliament to local government, in the armed forces, policing, the professions, the arts and sports, and of course in business."

The Home Secretary said she wants Britain's universities to "provide high quality learning about faith and Islam and to establish the UK as centre of excellence outside the Islamic world for Islamic studies".

She repeated the Government's new position there is no such thing as "Islamic terrorism", telling the audience: "Terrorism has no place in Islamic thought, teaching or tradition. It is the opposite of everything that Islam stands for: Peace, Tolerance and Obedience to God.

"The ideology promoted by terrorists is a perverse rewriting of history and politics, and a misreading of a great religion."

But Miss Smith said that terrorist plots in the UK had been traced back to Pakistan, and also that the terrorist threat to Pakistan had links to the UK.

She called on the people of both countries to play their part by rejecting the terrorists' ideology, and isolating those who support them.

The Home Secretary added: "The majority has to speak out against the terrorist world view; challenge their image; call to account advocates of violence extremism; protect our institutions; and support those who are most at risk. But to do all this the majority has to make itself stronger, more articulate and outspoken, more challenging."

Last month, the Vatican's newspaper reported that Islam had overtaken Roman Catholicism to become the world's largest single religious denomination.

In an interview with the paper Monsignor Vittorio Formenti, compilier of the Annuario Pontificio, the Vatican yearbook, said: "For the first time in history, we are no longer at the top: Muslims have overtaken us."

He said that figures for 2006 showed that Catholics accounted for 17.4 per cent of the world population while Muslims accounted for 19.2 per cent.