Cardinal Cormac Murphy-O’Connor, the head of the Church in England and Wales, said that since the September 11 terrorist attacks on America, public opinion had become suspicious of religion in general and of Islam in particular.
He said that religious communities were now vulnerable to restrictive laws which are being "made in a time of perceived crisis".
It was now necessary, he said, for the followers of the two faiths to unite to uphold religious freedom as a "natural right of every human being to be respected by every government".
Speaking to the Muslim Council of Wales at the University of Cardiff, he said: "There are times when we may all feel that we are not exactly muzzled or silenced, but we are most certainly not free to express our deeply held convictions, sometimes simply for reasons linked to so-called 'political correctness'.
"I think there are ways we can work with those who form public opinion to solve many of these problems and I am certain that we should do this together."
The Cardinal said that the problem of Islamist terrorism had "created an atmosphere where ordinary Muslims feel very uncomfortable and unfairly singled out by people who often seem not to understand them at all".
The "spotlight has been firmly locked on to Islam", he said, adding that as a result Muslims often felt "misrepresented or at least misunderstood by our media and in public opinion".
He said that although British authorities tended to treat religious communities with respect it was a difficult time for those involved in governing and policing society.
Muslims and Christians together had to fight against those who wished to "make sure religion had no public voice", the cardinal said.
"The space for dialogue between our religions and our culture has to be a public one," he added.
"In other words, religious communities need to be able to operate with a certain degree of autonomy. If politicians at national or local level – or even academics, for that matter – think they know what is best for religions, they will not act in our best interests, and could well be tempted to try to manipulate the ways we contribute to society.
"Nobody should be blind to the risk of basing decisions about religious groups on sociological or security-driven criteria.
"Of course we should not presume that people anywhere will respect us. We have to earn their respect and when we have it, we need to work to keep it."
The conciliatory remarks of Cardinal Murphy-O’Connor come less than a year after a group of 100 radical Muslims gathered on the piazza of Westminster Cathedral to express their anger over Pope Benedict XVI’s speech at the University of Regensburg, Germany, last September.
Anjem Choudray, one of the ringleaders, was later investigated by police for suggesting that the Pope should be executed because of his comments linking Islam to violence.
The protesters held up placards reading: "May Allah curse the Pope", "Pope go to hell", "Jesus is the slave of Allah", "Jesus is the messenger of Islam" and "Trinity of evil: Bush, Blair and the Pope".
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