Parents' leaders and pressure groups claimed that the decision would open the floodgates to schools of all faiths to adopt the practice - thus paving the way for more segregation in schools.
The row comes embarrassingly just days before a government White Paper on education is expected to tackle the controversy over school admissions.
It is set to back moves, including "busing", to open up better performing schools in the leafy suburbs to families from poorer homes. Ms Kelly's decision gave the green light to the London Oratory School, where Tony Blair sends his three children, to carry on the practice. The school says that it uses the interviews to determine parents' commitment to their faith, whatever it is.
Last night Comprehensive Future, a Labour party pressure group set up to campaign for an end to selection in schools, warned that the decision would allow all faith groups to follow suit.
Sources suggested Ms Kelly had no choice but to allow the practice to continue in view of a High Court ruling last year that it would require new legislation to ban interviews.
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