The French families minister, Laurence Rossignol, told the BFM TV she was "shocked" by the "irresponsibility" of the brands creating Islamic clothing and headscarves.
"When brands invest in the Islamic clothing market - just because it's lucrative - they're stepping away from their social responsibilities, and from some perspectives, they're promoting an enslavement of women's bodies," she said.
Her comments came after former fashion mogul Pierre Berge lashed out at the designers, accusing them of taking part in the "enslavement of women".
The French businessman, partner of the late fashion legend Yves Saint Laurent, took aim at the wave of big fashion chains that have followed the Italian designers Dolce & Gabbana in catering specifically to the Muslim market.
"I am scandalized," he told Europe 1 French radio.
"Creators should have nothing to do with Islamic fashion. Designers are there to make women more beautiful, to give them their freedom, not to collaborate with this dictatorship which imposes this abominable thing by which we hide women and make them live a hidden life."
"Renounce the money and have some principles," he declared, lashing the new fashion for "modest" Muslim-friendly lines.
Earlier this year Dolce & Gabbana became the first major western brand to openly aim at capturing a corner of the Islamic fashion market - estimated to be worth $260 billion (230 billion euros) - with its Abaya range.
It included 14 abayas or ankle-length dresses, which it matched with embroidered headscarves and hijabs.
The Swedish giant H&M followed their lead, using a veiled Muslim women in its advertising campaign, with the Japanese brand Uniqlo earlier this month announcing it would begin selling hijabs in its London stores.
The British brand Marks & Spencer has also put its toe in the water, marketing full-body "burqini" swimming costumes in its online store.
Last year Zara, Tommy Hilfiger, Oscar de la Renta and Mango all launched varyingly "modest" collections to coincide with the holy Muslim month of Ramadan, picking up on the success of a small DKNY line the previous year.
But Berge, 85, who ran the Yves Saint Laurent fashion house for four decades, decried their "opportunism".
"These creators who are taking part in the enslavement of women should ask themselves some questions," he added.
"In one way they are complicit, and all this to make make money. Principles should come before money," Berge argued.
"In life you have to choose the side of freedom," he said. Rather than covering women up, "we must teach (Muslim) women to revolt, to take their clothes off, to learn to live like most of the women in the rest of the world.
"It's absolutely inadmissible. It is not tolerable," he told the radio station.
Berge - who spends most of his time in Muslim-majority Morocco - said: "I am definitely not an Islamophobe. Women have a right to wear headscarves, but I do not see why we are going towards this religion, these practices and mores that are absolutely incompatible with our western freedoms."