Ofsted revealed on Thursday that 49 per cent are now rated as below 'good', while 26 per cent have been deemed 'inadequate'.
The figures include private faith schools which are not affiliated with the Independent Schools Council.
Inspectors say a fresh focus on leadership and British values, under new standards implemented three years, is one factor behind the decline.
Ofsted said: "The new standards on fundamental British values look at requirements in relation to written policies on the curriculum, the quality of teaching and the spiritual, moral, social and cultural development of pupils.
"While numbers are small, a higher proportion of the weaker faith schools are failing on these requirements when compared to those with no faith."
The number of UK independent faith schools, which are fee-paying and usually smaller than other schools, now number slightly more than 300.
One third of private Christian schools (35 of 105) were rated less than good, while 81 of 139 Muslim ones were rated as 'requiring improvement' or 'inadequate'.
Of the 58 independent Jewish schools, more than 50 per cent were deemed to be below good.
All schools are required to model and teach British values, following the Trojan horse affair when concerns were raised that a small number of schools in Birmingham were propagating Islamist ideology.