Timothy Garton Ash had an interesting article  in The Guardian this week, on the subject of religion in a free society. His argument is that for religious diversity to work we need to spell out more clearly the essentials of a free society.
Freedom of expression must be reclaimed from political correctness. Freedom of religion and equality before the law must be reasserted. Doing this requires a secular public sphere but the question is, what does that mean in practice?
It should not mean every trace of religion has to be purged. Displaying Christmas manger scenes in public buildings, for instance, or exhibiting the Ten Commandments in a law court does not strike me as problematic. It merely reflects the heritage of a country's culture and laws and, in reality, does no harm.
As Garton Ash says, it is practical questions that matter more than the theory of secularism. How to apply it to faith schools, for instance, or the teaching of evolution, the Mohammed cartoons, the building of new mosques or the hijab?
I have no problem with faith schools receiving public funding, but they should not discriminate between applicants, and religious instruction should be optional, separate from the standard timetable, and funded by the church, not the taxpayer. The theory of evolution should be taught in science lessons, though not perhaps as an absolute truth. Intelligent design, on the other hand, has no place in science lessons. This is not to say it's invalid, just that it's not a scientific theory and should not be taught as such.
The Mohammed cartoons are a straightforward example of freedom of expression. Living in a free society means you have the right to offend, and the right to be offended (but not to incite or threaten violence). New mosques and the hijab, on the other hand, are matters of equal treatment and religious freedom. People should be free to pursue their faith as they see fit, so long they don't harm others in the process.
This whole debate is one that liberalism is well equipped to deal with.