Religious education in England's schools should be renamed Religion and Worldviews to reflect the diversity of modern Britain, say experts.
The subject should include non-religious worldviews as well as major faiths, says the Commission on Religious Education final report.
It follows research suggesting at least a quarter of schools break the law on teaching RE.
Without an overhaul, the subject could wither, the authors warn.
The independent Commission was set up two years ago by the Religious Education Council of England and Wales, amid growing concerns about the quality of RE lessons.
The commission's report confirms that the quality of RE in schools is "highly variable".
There is some excellent practice in some schools. it says, but in others the amount of time allocated to the subject is being squeezed, and the subject is suffering from an across-the-board decline in specialist teachers.
"RE needs rejuvenating if it is to continue to make its important contribution, indeed if it is not to wither on the vine," says Commission Chairman, The Very Rev Dr John Hall, Dean of Westminster and a former chief education officer for the Church of England, in his foreword.
The new subject would allow pupils to study the different traditions of major religions such as Christianity, Buddhism, Hinduism, Islam, Judaism and Sikhism but alongside these they would also look at non-religious worldviews like humanism, secularism, atheism and agnosticism.
"Life in Britain, indeed life in our world, is very different from life in the 1970s when RE began to include other world religious and beliefs besides Christianity," says Dr Hall.
He believes it has never been more important for people to understand the main traditions of faith and belief and the wide variety of worldviews, and to "achieve fluency in relating to people with different traditions and outlooks from their own".
At present, he warns, "the quality of RE in too many schools is inadequate in enabling pupils to engage deeply with the worldviews they will encounter".
To counter this the commission wants the government to change the law on RE to ensure that all pupils, no matter what type of school they attend - including faith schools and academies - have full access to the proposed Religion and Worldviews curriculum.
Schools would have to publish a detailed statement on how they achieve this and Ofsted would have the power to ensure that minimum standards are met.
The Church of England's chief education officer, Nigel Genders, agreed that the report's call for a new vision for RE was vital and timely "if we are to equip children for life in the modern world where religion and belief play such important roles".
However, a spokesman for the Catholic Education Service, while applauding the attempt at improving RE in all schools, said the report failed to produce a consensus on how to achieve this.
"This report is not so much an attempt to improve RE as to fundamentally change its character," said the spokesman, who warned the changes risked the subject losing "all academic value and integrity".
And the Vice President of the Board of Deputies of British Jews, Edwin Shuker, said the report was "fundamentally undermined by the dilution of religious education through the inclusion of all worldviews in an already tight teaching timetable".
"This might be seen as an attempt by those hostile to faith to push their agenda of undermining rigour in religious education at a time when faith literacy could not be more important."
But Andrew Copson, chief executive of Humanists UK, called the recommendations "a once in a generation opportunity to save the teaching of religious and non-religious worldviews".
"If the nettle is not grasped, decline will continue and the subject will sink into irrelevance at a time when the need for knowledge and understanding... is more acute than ever. "
Stephen Evans, chief executive of the National Secular Society called the proposals "significant progress, although the deference to religious interests has limited the commission's ambitions, making its report an inevitable fudge."
Ben Wood, chairman of the National Association of Teachers of RE, said the plan to include non-religious worldviews reflected "current practice in many schools where RE is taught well" and looked forward to working with policymakers to take the subject forward.
The Department for Education said it will look into the report's recommendations.