It says teachers should include ways in which religion is not always a force for good.
Increasingly pupils have been opting to study RE for GCSE and A-level exams.
Ofsted says that in England, which it covers, RE is being taught better.
In many schools, religion is linked with contemporary religious and moral issues, such as whether the war in Iraq was morally justified.
But all too often, say the inspectors, the exam system encourages "standard, mechanistic responses" running the risk of "trivialising significant religious issues".
It says students are often denied the profound understanding they need of the impact of religion on society.
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