Muslim civic leaders are hoping to draw on the little-known role played by almost half a million Muslims in Britain's first world war effort to help improve community relations during the conflict's centenary.

The experience of 400,000 Muslim soldiers who fought for Britain is one of the war's least-known stories, according to research released on Saturday, as leading Muslim civic groups involved in a major festival bringing together their communities this week set out why they will be taking part in the centenary as a moment of national reflection and shared commemoration.

Only 2% of people are aware that this force from an undivided India – present-day Pakistan, India and Bangladesh – fought and died alongside British troops, according to an ICM survey released by the thinktank British Future to coincide with the Living Islam event.

Educating people about lesser-known narratives from the conflict is being viewed as a way of countering anti-Muslim prejudice and, potentially, tackling alienation and the lure of violent extremism among some young Muslims.

Sughra Ahmed, president of the Islamic Society of Britain, said of the centenary: "We thought it was important at the Living Islam festival to play our part in marking this important moment of national reflection and shared commemoration.

Many British Muslims won't know that hundreds of thousands of Muslims served in both world wars, so it's a chance for people to learn about that, and to think about what it means for us today. It is good too for wider British society to realise that our contribution to Britain goes back much further than many will realise. I think that could help us to come together to address the challenges of integration that we face in Britain today."

Historian Jahan Mahmood has been invited to present at the Living Islam festival in Lincoln using his 'travelling military museum' incorporating British, Indian and German uniforms and decommissioned weapons, which he uses to educate young people about the role of the British Indian Army in the two world wars.

He said: "I want to not just highlight the contribution made by different ethnic communities, but also delve into more Muslim stories and family histories, including those who fought for and against Britain, or refused to fight."

He added that while history from the second world war "lent itself towards challenging isolationist and extremist narratives today, the preceding war was potentially much more controversial since it involved Muslims being pitted against one another and the dismantling of the Ottoman empire".

"It makes it more difficult with the current middle east crisis to argue, for example, that fighting in the first world war was the right thing to do. But remembering and researching it does enhance the sense of being stakeholders in British society, and having a shared narrative with other members of the British public."

As many as 400,000 Muslims made up one-third of the Indian Army of 1.3 million, along with 100,000 Sikhs, and up to 800,000 Hindu soldiers. Yet when asked to estimate how many Muslims fought on the British side in 1914, only 2% of those surveyed by British Future correctly placed the number at between 250,000 and 500,000.

Serving Muslim soldiers are among those in attendance at the Living Islam festival as the army seeks to improve ties with Muslim communities.

Imam Asim Hafiz, Islamic religious adviser to the Ministry of Defence, will also attend. He said: "If many people don't know that Muslims have fought for this country since the first world war and serve in its armed forces today, then we need to ensure that is understood to be part of the history that we will all come together to commemorate during this centenary. There is a genuine commitment at the very top to seeing our armed forces more fully represent the country that we serve today, across every ethnicity and faith, including the Muslim community.

"But I don't really see our presence at an event like Living Islam as being about recruitment; rather, this is primarily about the deeper dialogue that can build better understanding and mutual trust."

A new Armed Forces Muslim Forum was launched at the Ministry of Defence last week, with Muslim soldiers and civic groups breaking the Ramadan fast together at an Iftar event hosted by the defence secretary, Philip Hammond. The chief of defence staff, Sir Nicholas Houghton, told the gathering that he wants to further increase the number of British Muslims serving in the Army.