Religion is important in shaping public policy and religious groups are helping build “a new politics based on hope” according to Government minister Stephen Timms.

Mr Timms, financial secretary to the Treasury and Labour’s vice-chair for faith groups, said the faith communities had always been the “natural allies” of progressive politics.

Sounding the final death knell for Alistair Campbell’s statement that Labour does not “do God”, Mr Timms made it clear that he did not believe religion is dying out and said faith groups have a lot to offer government.

He was speaking on the day that new research from Christian charity Tearfund showed churchgoing making “significant” increases after years of decline.

Mr Timms referred to the problems in the world economy, the conflict in the Middle East and more immediate problems such as last weekend’s stabbing of Stephen Lewis when leaving a church hall party in his own constituency in East London.

Mr Timms said: “It would be easy to lapse in the face of challenges of that magnitude into cynicism or even despair – to conclude that nothing can be done by politicians effectively to resolve these enormous challenges.

“But it is the calling of politicians to figure out how to tackle them, to identify solutions and to work to implement them.”

He said the religious groups of Britain were crucial to this process and singled out the Muslim community for particular praise. “Muslims in Britain have helped faith gain a new voice and a new confidence,” he said.

He said the Government does not accept that the right response to the current economic crisis is to let it run its course.

“Our view is that Government can make a difference, standing alongside people through this period, working together to rebuild growth in the economy and to create new jobs.”

This was where faith groups came in.

“What I want to argue today is that the faith communities offer a rich resource of hopefulness which, in progressive politics, we need to tap into and draw upon.”