Perhaps one of the most cherished freedoms of liberal democracy (in the sense of classical liberalism, not modern progressivism) is the freedom of religion. Much though I admire many elements of Western Civilization prior to the modern era, I cannot help thinking that the end of the formal confessional state has generally been a good thing not only for the state, but even more so for the Church. It has given the Church, no longer tied down by the need to support explicitly Catholic regimes, the freedom to speak more openly and forcefully on the demands that Christ’s message puts upon us in the public and economic realms.
That said, it seems to me that there is a built in contradiction in the place of religious freedom in classical liberalism: While religious freedom is a central element of classical liberalism, the ability of a state to function as a liberal democracy will collapse if a large majority of the population do not share a common basic moral and philosophical (and thus by implication theological) worldview. Thus, while religious freedom is a foundational element of classical liberalism, only a certain degree of religious conformity makes it possible.
Why do I argue this? If there is a basic agreement throughout society about what is right, what is wrong, what constitutes the common good, under what conditions people are meant to live, etc., then it is possible for the institutions of a liberal democracy to be used to allow people to sort out how to achieve these ends. Disagreements may be passionate, as people will not agree on the pragmatic questions of how it is best to run a country. But compromise will at least be possible, and the democracy is likely to survive.
If, however, there is fundamental disagreement among the populace about basic issues of right and wrong and what the purpose of the human person is, the victory of the other side will increasingly look to the defeated like an unacceptable tyranny, and the state will risk coming apart at the seams.