The move will see Oxford and Cambridge Universities host a group of scholars who will lead debate on key issues such as women and loyalty to the UK.
The plans have angered some hardline activists who accuse ministers of trying to create state-sponsored Islam.
But Communities Secretary Hazel Blears said it was government's job to support Muslim leaders on controversial issues.
Under the plans, the two universities will bring together about 20 leading thinkers, yet to be named, to debate critical issues affecting Muslims in the UK. The Department for Communities is responsible for the government's strategy to combat violent extremism, known as "Prevent".
Anything that helps to make our communities stronger should be welcomed - provided that it's not used to isolate, control or change Sheikh Ibrahim Mogra
It will provide funding and support for the project but maintains that the board's work will be completely independent of political interference.
The board's work will focus on examining issues relating to Islam's place in Britain and obligations as a citizen.
Ministers say the board's membership will "reflect the diversity of Islam and Muslim communities in the UK" and the work will include seminars around the country.
Sheikh Ibrahim Mogra, a leading imam from Leicester, said establishing a specialist board was the brainchild of a group of Muslims, not the government.
He said: "We felt we needed something of this nature to help create a better structured approach to how we are educating our children.
"We feel our children need to be taught that they can be proud Muslims and proud young British people."
Sheikh Mogra urged communities to support the board - but said there would be reservations about the relationship with government.
"Anything that helps to make our communities stronger should be welcomed - provided that it's not used to isolate, control or change what a community is.
"This board has to be something owned by us, driven by us but supported by government. We've made it clear that it's not for government to touch our theology or touch the way we train our people."
Those concerns were echoed by the Muslim Council of Britain (MCB), the main umbrella group which has a rocky relationship with ministers.
"For too long now, British Muslims have been viewed by this government through the narrow prism of security," said MCB chief Dr Muhammad Abdul Bari.
"British Muslims - like all citizens - have every right to peacefully disagree with government policies if they wish and they do not need to be 're-programmed' by a government-approved list of theologians,"
Ms Blears said the department's support for the project emerged out of debate with Muslim communities who asked ministers for help in supporting the work of key thinkers across the UK.
The British government's interference amongst the Muslim community, and matters of Islam, is unprecedented in comparison with any other religion Taji Mustafa, Hizb ut-Tahrir
"We have made significant progress working with communities to build an alliance against violent extremists," said Ms Blears.
"We have a responsibility to ensure that our young people are equipped with the skills they need to stand up to violent extremists and help them understand how their faith is compatible with wider shared values.
"It is not for government to dictate on matters of faith or religious teaching. But Muslim communities themselves have told us that stronger leadership is needed on what are often controversial issues."
But Islamic groups who have clashed in the past with the government have already attacked the plans.
Taji Mustafa of Hizb ut-Tahrir, a group that fought government attempts to ban it, predicted that many ordinary Muslims would be suspicious.
"The British government's interference amongst the Muslim community and matters of Islam, is unprecedented in comparison with any other religion," said Mr Mustafa.
"The government would like nothing more than to have credible figures pronounce that opposition to their foreign policy is tantamount to heretical extremism. Their problem hitherto has been to find credible figures to do their work."
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