The British government said it welcomed democratization efforts that began in 2010 with general elections in Myanmar.
A report published Monday by the British Foreign and Commonwealth Office said Myanmar gained ground in some aspects but fell short in many key areas.
On the status of political prisoners, the report said the government set up a mechanism to determine their fate but 200 prisoners remain behind bars. The freedom to demonstrate peace increased last year, though the report said there were concerns about how the government managed organized protests.
Myanmar has experienced an increase in violence between Buddhists and minority Muslims, in the central parts of the country and Rakhine and Kachin states.
"The U.K. is concerned by the apparent systematic destruction of mosques in Rakhine state during the recent violence and by the destruction of places of worship in Kachin state during the ongoing conflict," the report said.
The European Union this month is to review sanctions on Myanmar. Rights groups said steady sanctions pressure may be needed to persuade the government to take outstanding concerns seriously.