The findings have prompted claims that some schools are using history 'as a vehicle for promoting political correctness'.
The study, funded by the Department for Education and Skills, looked into 'emotive and controversial' history teaching in primary and secondary schools.
It found some teachers are dropping courses covering the Holocaust at the earliest opportunity over fears Muslim pupils might express anti-Semitic and anti-Israel reactions in class.
The researchers gave the example of a secondary school in an unnamed northern city, which dropped the Holocaust as a subject for GCSE coursework.
The report said teachers feared confronting 'anti-Semitic sentiment and Holocaust denial among some Muslim pupils'.
It added: "In another department, the Holocaust was taught despite anti-Semitic sentiment among some pupils.
"But the same department deliberately avoided teaching the Crusades at Key Stage 3 (11- to 14-year-olds) because their balanced treatment of the topic would have challenged what was taught in some local mosques."