I’ve never heard of Muslims referred to as Asians, although if one wanted to be a nitpicker, some of them are from Asia. Where have you heard this euphemism? Is it a Brit thing?
Yes. For example, the British media will refer to Pakistanis (who are almost all muslim) as "Asians." Pakistan is in Asia, so it's technically correct but also overly broad. The object is to obscure the fact that they are reporting on muslims.