Data from the 2011 census shows one in 12 schoolchildren were Muslim. The total number of Muslims in the UK rose from 1.55m in 2001 to 2.7m in 2001.
While less than half of British Muslims were born in the UK, 73% identified themselves as British.
Dr Sundas Ali, analyst for the Muslim Council of Britain report, said it was a "frank snapshot" of Muslim life.
The report suggests the number of British Muslims has grown quickly since 2001, with a third aged 15-or-under at the time of the 2011 census.
But it says 46% of British Muslims live in the some of the most deprived local authority districts in England - an increase since the 2001 census.
BBC religious affairs correspondent Caroline Wyatt said the report was an "unprecedented snapshot" of Muslims in England and Wales today.
Our correspondent said the economic picture painted by the report was "mixed" and that while "many British Muslims are entrepreneurs, nearly half live in the most deprived areas".
"The number of British Muslims has grown quickly over the last 10 years - meaning around a third are 15 or under - living mainly in London, and big cities in the West Midlands, the North West and Yorkshire," she said.
The report suggests 6% of Muslims struggle to speak English, while 24% of Muslims over the age of 16 are qualified to degree level, compared to 27% the general population.
There were 329,694 Muslim full-time students in 2011 - 43% female and 57% male.
However, it suggests that 71% of Muslim women between the ages of 16 and 24 were not in employment, compared to approximately half the general population.
For women aged 25 to 49, it says that 57% of Muslim women were in employment, compared with 80% of women overall.
Analysis of the report would lead the Muslim community to "reflect within itself," Dr Ali told BBC Asian Network.
"We do tell Muslim mosques and charities that these are the problems, these are the social realities and you need to do something about it," she said.
'Myths about Muslims'
"It's not a document complaining to the government just about what they need to do, it's targeting a number of people, including Muslim civil society," she added.
Dr Ali said there were many positives from the report "but also many challenges".
Omar Khan, from the race equality think tank the Runnymede foundation, said the report made it clear Muslims do not have a problem with "British values" or identifying with Britain.
"It nails some significant myths about Muslims," Mr Khan told BBC Asian Network.
"The numbers of Muslims, which is often exaggerated; how proud Muslims are to be British; how well they fit in; and the narrative around British values.
"They're proud to call themselves British, don't have allegiances to other countries in any major way, and they don't have any confusion around where their identity lies."