The Chief Rabbi has called for faith groups to make a "covenant" with Britain, which lays out responsibilities towards the country and to others.
Speaking at a debate in the House of Lords on multiculturalism in Britain, Lord Sacks said: "I have a simple proposal.
"I believe that all Britain's faith communities should be invited to make a voluntary covenant with Britain articulating our responsibilities to others and to the nation as a whole, so that we can be true to our faith while being a blessing to others regardless of theirs."
He added: "The good news about religion is that it creates communities based on altruism and trust. It teaches people to make sacrifices for the sake of others. It builds social capital. The bad news is that every community divides as it unites, because for every "us" there is a "them"-the people not like us.
"The best way to improve interfaith dialogue in multicultural Britain is to create a sense of national identity so strong that it brings different ethnic and religious communities together in pursuit of the common good-not just the good for "my" group, but the good for all of us together.
"A nation should respect its faiths, and faiths should respect the nation."
The debate was initiated by Labour peer Lord Mitchell on how "to improve interfaith dialogue in multicultural Britain."
It took almost a year for the Chief Rabbi to take part in a debate at the House of Lords since his maiden speech, but since December 2010 he has spoken on a variety of subjects including the Middle East, human rights and marriage.