New plans for Britain's first school for gay, lesbian, bisexual and transgender pupils have been revealed.

The taxpayer-funded youth group LGBT Youth North West has drawn up a proposal for a school to cater for children aged 13 and older who have been bullied because of their sexuality.

Describing mainstream schools as "one of the last bastions of homophobia" organisers behind the initiative said they hoped the idea will be emulated across the country

Amelia Lee, the group's strategic director, said that in a survey of gay, lesbian and transgender young people many felt teachers had been unsupportive and often gave the advice to 'ignore' bullying.

"Teachers in mainstream schools have problems in tackling issues like homophobic bullying and coming out," she said. "Unfortunately, schools can be one of the last bastions of homophobia.

"We have also seen tragic cases such as that of Elizabeth Lowe, a 14-year-old who committed suicide in a park in Manchester because she was struggling with coming out and was worried about telling her parents.

"It's to combat problems like those that we want to work with schools and pupil referral units to help young people who are struggling in mainstream education," she explained.

The group received a grant for £63,000 from the Department for Communities and Local Government to enable it to purchase the building where it is based, the Joyce Layland LGBT Centre in central Manchester.

And it used part of the funding to conduct a feasibility study into setting up a school and to pay for a visit to the Harvey Milk School in the New York, upon which the new school is modelled.

Miss Lee said that by coincidence Education Secretary Nicky Morgan was also visiting the school enabling her to set up a meeting with officials at the Department for Education.

The plans have however come under fire following suggestions that an LGBT school would constitute a form of segregation and would hinder efforts to improve tolerance of gay people.

But Tory MP and former education minister Tim Loughton said: 'We need to do a lot more to combat homophobic bullying and to create a more tolerant society.

'But I cannot see how segregating a group of young people identified by their sexuality can aid better engagement and understanding.

'The way to achieve more integration, understanding and empathy is not by segregating members of one group, and this would seem to me to be a step backwards from achieving tolerance.'

Ms Lee has denied that the school would become a 'ghetto' for gay children and would also be open to pupils who were not gay or transgender but felt more comfortable in such an environment.

"The last thing we want is for young people to fall out of mainstream education permanently, or for this to become a ghetto for lesbian, gay and bisexual students," she said.

"This would be somewhere that students who are struggling with the negative effects of issues like bullying could attend classes for a period of time while ensuring they get the grades they are capable of."

According to the Daily Mail a source close to Education Secretary Nicky Morgan said: "There is simply no way that we will approve a free school specifically for LGBT young people. Pupils regardless of their sexuality should be educated in mainstream schools which should be equipped to tackle any bullying that should occur."

Ruth Hunt, Chief Executive of Stonewall issued a statement in which she said that segregated schools are not the answer to combatting the negative experiences of LGBT students.

"We know that lesbian, gay, bisexual and trans (LGBT) students still experience bullying and harassment. That needs to change. While we're sympathetic to the aims and objectives of LGBT-only schools, we don't see them as the answer. Our experience working with more than 12,000 schools across the country shows that it is possible to create safe and inclusive environments where all pupils can be themselves. This makes the learning environment better for all students – regardless of their sexual orientation – and is key to eradicating homophobia in every single school in Britain."

The group said it had already had backing from Manchester City Council as well as the Schools Out anti-homophobic bullying campaign.

LGBT Youth North West is a regional organisation that seeks to support lesbian, gay, bisexual and trans young people in the North West of England.

Miss Lee said she intends to wait until after the General Election to decide whether to go ahead with an application to set up a free school, with the first pupils starting in around three years' time.