The BBC has reported that the Government has denied a 'climb down' over the faith school issue. Basically, the Government wanted all Faith Schools to be obliged to give up to 25% of their school places to children who did not subscribe to the designated faith of that school.
What I'd like to know is why people think that the state should fund faith schools anyway, either in whole or in part. If people want their children brought up in a particular faith, that's the job of the parents, not the state. Yes, by all means teach children about the basic precepts of each faith and the differences and similarities between faiths, so that they can learn about respect and tolerance for others, but the state should not be expected to fund their religious indoctrination.
If you want your child to go to a faith-specific school, then fine, pay for them to go to one. Otherwise, send them to a state school and let them get on with the National Curriculum, and teach them about their own faith (on in most cases the faith their parents have chosen for them, seeing as kids usually have no say in the matter) at home or at evening/weekend classes.
Many of my Muslim friends send their children to state schools and then to additional lessons at the local Madrasah. Many of my Christian friends send their children to Sunday School at the local Church. That's their choice and I respect them for it.