Midland police and councils with large Muslim communities were urged to identify "hotspots" where extremists could be operating, when officials met Cabinet Minister Ruth Kelly yesterday.
Representatives of West Midlands Police Authority and Dudley Council were summoned for a meeting in London with Ms Kelly, the Secretary of State for Communities and Local Government.
The hour-long summit followed two weeks in which politicians have focused attention on British Muslims, with discussion about faith schools, veils and divisions in society.
The Muslim Council of Britain yesterday called for an end to the focus on Muslims, claiming they faced "a barrage of demonisation".
And Birmingham MP Khalid Mahmood (Lab Perry Barr): "This is a debate which is polarising communities and the only people who benefit are extremists."
Ms Kelly urged forces and councils with large Muslim communities to identify "hot spot" neighbourhoods where terrorists could operate.
She said: "The world has changed since September 11 and 7/7.
"The Government has had to change and respond to that, and we appeal to local authorities to do the same."
The event was attended by representatives from 20 "key" local councils and forces and senior police officers including Scotland Yard Assistant Commissioner Andy Hayman, who is responsible for anti-terrorist operations.
Afterwards, Ms Kelly denied that ministers were stigmatising the Muslim community and insisted action was necessary to deal with the scale of the Islamist threat.
She said: "We have to take to a new level our partnership with those Muslim organisations who are showing real leadership on these issues and provide them with more support.
"I think that we really have to raise our game. We have to work in a new way to face up to the size of the threat."
But Dr Mohammad Abdul Bari, secretary-general of the Muslim Council of Britain, said the talks could do more harm than good.
He said: "What is happening, especially in the last few months, has been a barrage of demonisation of the Muslim community to such an extent that the community is now scared and the whole community feels vulnerable."
Mr Mahmood called for Muslim scholars to look at the question of veils.
He said: "This is not an issue for politicians. We need a group of scholars from the Muslim community looking at the issue of what is permissible and what is not.
"It is not for the Government to decide. The Muslim community should come forward in a positive way and regulate itself."
The Muslim Council of Britain would be a suitable body to appoint the scholars, he said. The chairman of the Commons Home Affairs Committee, John Denham, warned that comments by ministers were exacerbating the tensions.
He said: "It seems to be producing a defensiveness and lack of willingness to debate on the Muslim side and in the majority a sort of generalised feeling that Muslims as a whole pose some sort of threat to our entire way of life."
Commons leader Jack Straw sparked controversy almost two weeks ago when he admitted to asking Muslim women if they would remove veils which fully cover their faces when visiting his Blackburn constituency offices.
