The Sydney Morning Herald reports that the Muslim leaders made the offer as the Catholic Church seeks to ease tensions between the two faiths.
The Australian Federation of Islamic Councils is also considering staging mixed-faith sporting competitions and mosque open days for the largest religious gathering to be staged in Australia, which will bring Pope Benedict here for the first time.
The Catholic Church has given a commitment that it will not try to convert members of other religious denominations taking part in inter-faith forums and volunteering facilities.
It is also calling for 8000 people, including those of other faiths, to volunteer for the largest Catholic event on the 2008 religious calendar. There will be roles in areas including operations and crowd management, customer service, language and translations, staffing, hospitality and catering, accommodation, production, communications, liturgy and evangelisation.
Fifteen Islamic religious and community leaders, including Sheik Shady Suleiman, representing the Lebanese Muslim Association, and the leaders of four Muslim schools, were briefed by the Catholic Church on Monday.
The olive branch comes almost a year after Pope Benedict provoked Islamic fury when he quoted an obscure medieval text which criticised some teachings of the prophet Muhammad as "evil and inhuman".
The president of the Australian Federation of Islamic Councils, Ikebal Patel, said Sydney's Islamic leaders had responded positively to the overtures of the Catholic Church and saw World Youth Day as an opportunity to "break down barriers" between the two faiths.
Some mosques would be willing to open their doors to inter-faith forums, and could even invite Catholics to Friday prayers. At least four or five schools present at the meeting would be willing to offer their school halls for boarding.
"I think as Muslims in Australia we want to demonstrate very positively we are part of the community. There is not inherently that much difference between Islam and Christianity and this is an opportunity to educate the general community and Christian faith."
Truce as Catholics invited to mosques (Sydney Morning Herald, 16/8/07)
LINKS (not necessarily endorsed by Church Resources)
World Youth Day 2008
WYD to showcase faith potential to unite world (CathNews, 16/8/07)
Howard, Rudd promise $15 million more for WYD (CathNews, 13/8/07)
Condoms not on for WYD (CathNews, 30/7/07)
Love in the air for WYD (CathNews, 24/7/07)
Young Christians helping WYD pilgrims get piece of action (CathNews, 19/7/07)
Open hearts to WYD pilgrims, Fisher urges Sydney (CathNews, 17/7/07)
Can't lease Randwick for WYD, trainers tell club (CathNews, 11/7/07)
Randwick no place for pope, opines Cup winner Cummings (CathNews, 10/7/07)
Pope set to come, trainers to sue over WYD (CathNews, 5/7/07)
WYD Cross arrives amid Randwick turmoil (CathNews, 2/7/07)
Randwick trainers "emotional" over WYD compensation (CathNews, 29/6/07)
Trainers still jumpy about WYD (CathNews, 26/6/07)
Guy's WYD song to welcome cross and icon (CathNews, 25/6/07)
US leads Australia in WYD registrations (CathNews, 15/5/07)
Aussie idol to sing WYD theme song (CathNews, 14/5/07)
Give young people WYD opportunities, nuncio says (CathNews, 11/5/07)
Sydney airport can't handle all WYD visitors, Pell says (CathNews, 2/5/07)
Thousands already on way to WYD (CathNews, 30/4/07)
Trainers seek $12 million compo over Benedict's WYD visit (CathNews, 23/4/07)
Telstra chief signs on for WYD (CathNews, 20/4/07)
Tsunami town welcomes WYD cross (CathNews, 19/4/07)
WYD Cross to visit tsunami-hit Gizo (CathNews, 5/4/07)
WYD Cross at N Korea border (CathNews, 1/3/07)
Race industry fears over WYD "chaos" (CathNews, 19/3/07)
Canberra parish launches live-in WYD community (CathNews, 6/3/07)
Free tourist visas for WYD participants (CathNews, 5/3/07)
500,000 crosses for WYD (CathNews, 2/3/07)