Conservative MPs have hit back at Rowan Williams, Richard Dawkins and dozens of other public figures who joined forces to argue a cap on admissions to faith schools must not be lifted.

Jacob Rees-Mogg, who is hailed as Tory party members' favourite to be leader, said the 'main effect' of the cap was to block new Catholic schools from opening so 'denying thousands of pupils the opportunity of a place in a diverse and nurturing environment'.

'Open, inclusive, diverse and integrated schools are to be welcomed, and existing Catholic schools provide a very good model for this,' he said in a letter to the Telegraph also signed by Sir Edward Leigh, MP for Gainsborough, Martin Vickers, MP for Cleethorpes, and Sir Bill Cash, MP for Stone.

It comes after a prominent letter signed by Dr Williams, Andrew Copson, the chief executive of Humanists UK and Richard Dawkins among others said scrapping the cap would be 'deleterious to social cohesion and respect' and 'allows schools to label children at the start of their lives with certain beliefs and then divide them up on that basis'.

The current law states that new faith schools must award 50 per cent of places to pupils irrespective of their faith. However the new education secretary Damian Hinds, who is a Catholic, is rumoured to be considering lifted the cap.

The topic is highly controversial as Catholics say that because their schools are over-subscribed Catholic pupils are turned away simply on the basis of their faith.

'Canon law forbids Catholic bishops from turning away Catholic pupils solely on the basis of their faith,' the letter in Thursday's Telegraph said. 'The combination of the cap and popularity of Catholic schools among people of other faiths, however, means that the Catholic Church is required to discriminate on exactly this basis. As such, it has been impossible to open new free schools.'

The Tory MPs letter says: 'To argue that the operator of the most diverse existing schools cannot be allowed to open new ones for fears they will not be diverse is entirely illogical.

'Advocates for diversity in education would do better to support the initiative to open more high-quality schools serving many of the most disadvantaged in our society. Scrapping the cap is the simplest and easiest way of achieving this.'

It is in reply to the letter from Dr Williams earlier this week, which was also signed by 70 other public figures, and said: 'The Government rightly identifies the promotion of mutual understanding and tolerance for those of different religions and beliefs as one of the most important roles for schools. As we are all aware, children are blind to the differences and immune to the prejudices that so often divide society. The duty of the education system... should not be to highlight and entrench such differences.'

The Catholic Church is strongly opposed to the cap and has said that it would not establish any new schools as long as it was in place, arguing it has a duty to educate Catholics.

But the Church of England said that the cap did not affect its work. Nigel Genders, its chief education officer, said: 'Neither the removal nor the retention of the faith cap will impact on our existing schools or any new ones we open.'