The number of Church of England bishops who sit in the House of Lords should be cut to make way for leaders of other faiths, a new report argues.
The Commission on Religion and Belief in Public Life also says major events including the next coronation should have a more "pluralist character" to reflect changing religious attitudes.
And it calls for a reduction in faith school admissions based on religion.
The Church of England said it was based on an "old-fashioned view".
The report, Living With Difference, also says:
- Anti-terror laws should be "refocused" to promote, rather than restrict, freedom of speech
- Schools should hold an "inclusive 'time for reflection'" rather than a compulsory Christian assembly
- A "national conversation" should create a "Magna Carta-style statement of values for public life" as an alternative to government-defined "fundamental British values"
The commission, chaired by crossbench peer and former judge Baroness Butler-Sloss and put together by 20 "leading religious and academic thinkers", said British society had been transformed in the past half century, with almost half the UK population now identifying themselves as non-religious.
However, Baroness Butler-Sloss said issues such as the Paris terror attacks and the recent row over the banning of a Church of England advert in cinemas showed religious beliefs were still central to society.
Speaking on BBC Radio 4's Today programme, she said it was "absolute rubbish" to say the report proposed getting rid of Christianity from public life.
"What we are saying is add to things, not change them so they diminish," she said.
She said other faiths should "play a part" in the coronation, and that schools should still have the right to hold religious assemblies if they wanted but should not be forced to do so.
On faith school admissions, she said no more than half of pupils should be selected because of their religion.
At the moment, 26 "Lords Spiritual" attend the Upper House, including the Archbishops of Canterbury and York.
They and the Bishops of Durham, London and Winchester automatically take seats in the Lords while there are 21 further seats for bishops, based on length of service.
The prelates are regular contributors to Lords proceedings, the Archbishop of Canterbury having spoken in last week's debate on military action in Syria. But there have been longstanding calls for other faiths to be represented and for clergy to have no role in the Upper House at all.
The commission was established by interfaith organisation the Woolf Institute and spent two years compiling its report.
The National Secular Society criticised its findings, saying it was full of "handwringing but few concrete solutions".
"They failed to call for the removal of the bishops from the House of Lords, Westminster being the only parliament in the world to have them," said its director Keith Porteous Wood.
"They even want even more clerics appointed there from minority faiths in a country where the majority are not religious."
The government has said reform of the House of Lords is not a priority after attempts by its coalition predecessor to make the chamber partly elected were abandoned in 2013 amid opposition from Tory MPs and peers.
The Church of England said the report "misunderstood" the role of the Church in schools and was characterised by the "old fashioned view that traditional religion is declining in importance and that non-adherence to a religion is the same as humanism or secularism".
"In a fortnight where we have seen overwhelming public support for the Church of England over the Lord's Prayer cinema advert, it is important to remember that most public opinion is strongly opposed to the marginalisation of Christianity," a spokesman said.