British laws and traditions such as the celebration of Christmas are under threat and must be vigorously upheld to stop ethnic segregation dividing society, according to major government review.

Waves of immigration have rapidly changed the character of some state schools and left residents in parts of Britain feeling unsettled, the landmark report will say.

These issues must be tackled head on, rather than swept under the carpet by politically correct council officials who fear being labelled “racist” if they assert British values or raise concerns, it will say.

The findings emerged as part of a wide-ranging, year-long government study by Dame Louise Casey, the government’s integration tsar.