The figures also show that the Internet has become the new battlefield.
According to the Observatory, a rising number of hate mails are being circulated through internet, which describe Muslims as terrorists, extremists and a danger to other cultures.
Last month, a Tilder Opinion poll revealed that over 70 percent of the French have a negative idea about Islam.
More than one in four think the Hajj pilgrimage is compatible with life in France. But the figures drop sharply when it comes to questions over a Halal diet, the Muslim festival of Eid, and fasting during the month of Ramadan.
Only one in ten consider the headscarf in public areas as acceptable.
Nearly a decade ago, France officially banned the headscarf in state run schools to preserve secularism. A move, which did more harm than good.
While the headscarf ban was initiated by right wing politicians, it was a communist party MP who called for a ban on burqa which is worn by just 2000 women out of an estimated 4.5 million Muslims in the country.
By and large, women have borne the brunt of anti-Muslim sentiments. And a future law could prevent women with headscarves from taking up any job in childcare.
Many Muslims live in the poor suburbs of big French cities. There are fears that such laws will marginalize Muslims even further.