In the domain of Extended Reality (XR), particularly Virtual Reality (VR), extensive research has been devoted to harnessing this transformative technology in various real-world applications. However, a critical challenge that must be addressed before unleashing the full potential of XR in practical scenarios is to ensure robust security and safeguard user privacy. This paper presents a systematic survey of the utility of biometric characteristics applied in the XR environment. To this end, we present a comprehensive overview of the different types of biometric modalities used for authentication and representation of users in a virtual environment. We discuss different biometric vulnerability gateways in general XR systems for the first time in the literature along with taxonomy. A comprehensive discussion on generating and authenticating biometric-based photorealistic avatars in XR environments is presented with a stringent taxonomy. We also discuss the availability of different datasets that are widely employed in evaluating biometric authentication in XR environments together with performance evaluation metrics. Finally, we discuss the open challenges and potential future work that need to be addressed in the field of biometrics in XR.