The Government is to relax restrictions which stop oversubscribed Catholic schools from selecting more than half their intake by reference to faith.
The move is part of wider plans to overhaul the schools system, with proposals to open new grammar schools expected in a green paper on Friday.
A No 10 source said that the admissions cap had failed in its objective of making faith schools more diverse.
"But it has prevented new Catholic schools from opening, which are more successful, more popular and more ethnically diverse than other types of state school,” the source continued.
