The Muslim community in Britain today face multiple challenges covering a wide range of spectrum from the basic right to exists, fighting the increasing trends of Islamophobia, having equal opportunities, to participate in public life, fully integrate within the society and be a positive member of the community. The recent events of September 11th in the US, July 7th in UK and the more recent row over the ban of the headscarf in UK and other European countries have placed tremendous challenges for the Muslim community. The increasingly available data on Muslims in the UK serves to highlight the plight of marginalisation faced by significant numbers of this group. The latest information from the last census on 20011 has given a new dimension to the Muslim presence in the UK. It shows that Muslims as the largest ethnic minority and that almost 50 percent of the Muslim population is now British born. Young Muslims generation can no longer live on their elders "the myth of return."Nor are they accepting to be marginalise within the society they were born in. They clearly identify themselves as being "British" and "Muslims" at the same time. They can no longer be called Muslims living in Britain, they are basically "British Muslims" Despite that, prejudice against Islam and Muslims has acquired new dimensions in recent years. Islam and its followers are being maligned, and the systematic distortion of Islam and Muslims is no longer a minor irritant that can be ignored. This paper intends to discuss the "British Muslims" phenomenon, the challenge of integration within the wider society, discrimination, Islamophobia, Muslims recognition, their response, the British government's response post the first Runnymede report.