David Cameron has made a pitch for new investment in the UK by Muslim countries, saying the UK hopes to offer a £200 million Islam-friendly bond as early as next year.
The Prime Minister said he wanted London to be "the greatest centre for Islamic finance in the Western world" as political and business leaders gathered in London.
A "world first" set of indices at the London Stock Exchange to help investors identify faith-compliant firms and projects was also announced as well as a £4.5 million boost to a small business growth fund.
Several world leaders, including King Abdullah of Jordan and the Sultan of Brunei, appeared on stage with Mr Cameron for the ninth World Islamic Economic Forum.
It is the first time the major annual event has been held outside of the Islamic world and the Prime Minister seized the chance to continue a push to secure foreign investment to push domestic economic recovery.
The global market in Islamic investments is rapidly expanding, rising by 150% since 2006 and expected to be worth £1.3 trillion next year.
Mr Cameron said Britain had already taken steps to ensure Muslims were not discriminated against - such as ending "double tax" on Islamic mortgages and introducing alternative forms of student and start-up loans to comply with a ban on interest payments.
It already had more Islam-compliant banks than any other Western country and many law firms and university courses centred on the subject, he said.
But he said that his ambition was for the country to compete with finance centres such as Dubai and Kuala Lumpur - not just other non-Islamic capitals.
"Already London is the biggest centre for Islamic finance outside the Islamic world," he told the gathering of 1,800 political and business leaders from over 115 countries.
"But today our ambition is to go further still. Because I don't just want London to be a great capital of Islamic finance in the Western world. I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world."
He went on: "When Islamic finance is growing 50% faster than traditional banking and when global Islamic investments are set to grow to £1.3 trillion by 2014 we want to make sure a big proportion of that new investment is made here in Britain."
Dismissing criticism of increasing foreign ownership in the UK - including "taking over our football clubs" - he said: "Foreign investment creates wealth, jobs and growth. And far from weakening our industrial base, that investment actually strengthens it.
Islamic investment in projects from the huge London Gateway port and the redevelopment of Battersea power station to Arsenal's Emirates stadium and offshore wind turbine were proof it was "already fundamental to our success", he added.
Outlining the new proposals, he said the Treasury was "working on the practicalities" of issuing an Islamic bond - or sukuk - worth around £200 million.
"We very much welcome the involvement of industry in developing this initiative which we hope to launch as early as next year," he said.
There will also be new indices - announced by the London Stock Exchange - to help investors identify suitable firms and projects.
"Again the City of London is leading the way - this time not just in Europe, but right across the world," he said.
"These not only identify companies that meet traditional Islamic investment principles but also use some of the most advanced techniques on the planet to screen financial ratios and enable investors to identify opportunities with lower volatility.
"For example, by ensuring that debt and cash fall within strict limits as a proportion of a company's total assets.
"In plain language, this means the creation of a new way of identifying Islamic finance opportunities - a world-leading Islamic Market Index.
"It is another global first for the City of London and yet another reason why London can be one of the great centres of Islamic finance anywhere in the world."
The UK is also giving £4.5 million - matched by a donation from the Shell Foundation - to the Nomou fund to support 600 medium-sized businesses with the aim of creating more than 15,000 jobs in unemployment-hit Jordan and Egypt as well as other countries in the region.
The Department for International Development is also more than doubling its contribution to the Arab Women's Enterprise Fund to £10 million from £4 million - matched by the Islamic Development Bank.
The Arab world has the lowest rates of female participation in the global labour force and the initiative seeks to help female entrepreneurs from poor communities and rural areas in Jordan, Egypt and Libya.
International Development Minister Alan Duncan said: "Jobs and growth are critical to the stability of the Middle East and North Africa.
"We are pleased to be working with the Shell Foundation to create thousands of jobs that will contribute towards the stable economic environment needed for growth and prosperity in the region.
"Women are the engine of growth and it is not possible for a country to develop without investing in women.
"We are delighted to be working with the Islamic Development Bank to design and implement exciting projects that will strengthen women's economic contribution to the Middle East and North Africa."