Gordon Brown's Budget next month, his eighth, is unlikely to be judged one of his most radical as the sombre backdrop of war in Iraq and a slowing economy mean his options are severely limited.

However, for many in Britain's two million-strong Muslim population, the Chancellor's speech will be eagerly anticipated. It is hoped he will announce a key and long-awaited tax concession that will allow many in the country's second largest religious community to enter the property market for the first time in their lives.

Hundreds of thousands of Muslims are locked out of property ownership by Koranic law that makes taking out a conventional mortgage a religious offence. The problem is that Islam forbids the charging or payment of interest, condemning this as unproductive usury or "riba".

Islamic or Shariah law does not just ban such mortgages, it also makes it hard for devout Muslims to participate in a wide range of financial products that most of us take for granted, from pensions and life insurance to credit cards and interest-bearing current accounts. Investments in companies are allowed but must avoid those involved in alcohol, tobacco, pornography and pork preparation. For British Muslims looking to buy their own home, there have been a range of unpalatable options to get around the problem.

Firstly, do what many do. Take a deep breath, put their religious beliefs to one side and opt for a conventional mortgage. Secondly, save or borrow the money from family and friends and buy with cash, an increasingly impractical course in an age of rampant house price inflation. Thirdly, they could opt to rent all their lives, a choice that has helped push down property values in areas with large Muslim communities.

Finally, there are now Shariah-compliant mortgages, although these are usually expensive because their complex structure means the property has to be bought twice using a financier as a middle-man. Currently, this means the deal attracts two sets of stamp duty and often two sets of legal work, ramping up the transaction costs.

A taskforce appointed more than two years ago by Bank of England Governor, Sir Edward George, and headed by former Barclays boss Andrew Buxton, has worked with Treasury officials to find a way through the impasse. It is believed in Whitehall that a solution may have been agreed, which could be announced in next month's budget, lifting the double stamp duty burden. It is hoped the move will unleash a torrent of Shariah-compliant financial products, giving Muslims a chance to participate in the full range of financial products available to the rest of the population.

In a speech to an Islamic home finance conference in London yesterday, George said the expected breakthrough on mortgages should lead to " the establishment of fully fledged Islamic financial institutions in this country, catering to our own Muslim and wider population, but participating too in the rapid growth of Islamic finance internationally."

As well as mainstream organisations such as HSBC and Merrill Lynch, a number of Muslim-run businesses are already eyeing up what could be a huge, untapped market worth an estimated £20 billion. This week saw the national launch of what is claimed to be the first network of Muslim independent financial advisers, First Ethical. It's managing director, Sufyan Ismail, said there was huge pent-up demand for Shariah investments and products approved by Islamic clerics because of the growing wealth of the Muslim population, particularly professionals.

British Muslims, about half of whom live in London, were also returning to their religious roots at a time when they felt increasingly under threat. The firm is due to open its first London office later this year.