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David Cameron has urged invitees to attend a Downing Street Eid reception and "put aside political differences".
Rishi Sunak will host Muslim figures for the annual celebration later.
Some politicians, business leaders and charity representatives said they would boycott the event in protest against the government's support of Israel.
Lord Cameron said he hosted a celebration at the Foreign Office a few days ago and "ambassadors from every Arab country turned up".
'Very good parties'
The foreign secretary said: "All these religious festivals are a time to put aside political differences and think of the things that bring us together.
"And one of the things that brings us together in Britain is that we're a country with an established church, but also a country that respects other faiths and respects other celebrations, and I think that's the right thing to do.
"So I'd urge people who get that nice invitation to go to No 10 Downing Street, whether it's Diwali, whether it's Eid, whether it's Easter, they're always very good parties and very well done and I'd encourage people to go."
Baroness Warsi is among those expected to avoid the event. The Conservative peer was Britain's first female Muslim cabinet minister, and has been outspoken in her criticism over the plight of people in Gaza.
She quit as Foreign Office Minister in David Cameron's cabinet in 2014, saying the government's policy over Gaza was "morally indefensible".
Israeli military action in Gaza, sparked by Hamas's 7 October attack, has caused widespread devastation and killed more than 33,000 Palestinians.
A government spokesperson said it understood humanitarian concerns regarding Gaza.
Sources in Downing Street have privately expressed concern at the number of people who might boycott the reception.
Asif Ansari, a leading businessman and charity fundraiser, said: "As a Muslim, I think it's very important for the Muslim community to have good relations with the British government.
"However, I feel very, very strongly this year with the position that the British government is taking.
"They are supporting Israel who stand accused of genocide, they stand accused of war crimes, the deprivation of water and food to women and children has left many starving and lastly, the killing of three British aid workers - after which Lord Cameron has said the UK would continue to supply arms to Israel - was an absolute red line."
A similar event held during Ramadan hosted by President Biden was subjected to a boycott of the White House earlier this month by those protesting US support for Israel.
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