The British Government is threatening to cut ties with the country's most high-profile Muslim organisation, the Muslim Council of Britain, over allegations that one of its most senior members is a supporter of Hamas.

Secretary of State for Communities and Local Government Hazel Blears has written to the Council, the Muslim representative organisation set up in the wake of the fatwa issued against author Salman Rushdie over his book The Satanic Verses, demanding that it clarifies the position of its deputy director-general, Dr Daud Abdullah.

The Government wants Dr Abdullah sacked from the council after he signed an inflammatory anti-Israel document, the Gaza Declaration in Istanbul, along with 89 other worldwide Muslim leaders. The declaration, drawn up during the recent conflict in Gaza, backed Hamas, endorsed action against any, including Britain's armed forces, who prevented arms smuggling into Gaza and included a series of obligations to the "Islamic Nation", including calling for the continuation of "the jihad and resistance against the occupier until the liberation of all Palestine."

Hamas, the militant Palestinian group backed by Syria and Iran and which won an election in Gaza in 2006, does not recognise the existence of Israel.

Dr Abdullah, who has been with the Muslim Council since its beginnings and led its boycott of Holocaust Memorial Day, is also on the steering committee of the Mosques and Imams National Advisory Board, or Minab, which receives government funding and is working to resolve issues over extremist imams and the radicalisation of young Muslims in Britain's mosques.

Government funding of Minab could also be at risk if Dr Abdullah is not removed from the Muslim Council of Britain and as a result the Minab steering committee.

A spokesman for the Department of Communities and Local Government told The Times: "We are aware of the conference held in Istanbul last month and are very concerned that the statement from the event calls for direct support for acts of violence in the Middle East and beyond. We are also aware that a senior member of the Muslim Council of Britain may have been a signatory to this statement. If proven, we would consider it very serious that an individual who is also a senior member of the MCB attended this conference and was a signatory to the statement. The Secretary of State has sought urgent clarification from the MCB as to whether this was the case.

"We are concerned that the MCB have so far not recognised the gravity of this situation. If it is proven that the individual concerned had been a signatory, we would expect them to ask him to resign and for the MCB to confirm their opposition to acts of violent extremism."

She continued: "If the situation is as we think it is, and if they do nothing about it, we will need to look again at our engagement with them."

The Government is taking increasingly strong steps to root out extremism when it masquerades under a moderate disguise.

In a speech last month, Communities Secretary Hazel Blears said: "The majority of imams are born or educated abroad. Some speak little English, making it harder to forge a connection with young people. Government is alive to these challenges - and that is why, in response to calls from Muslim communities, we are looking to enable more faith leaders to be trained in this country, to improve qualification standards, and to help existing faith leaders improve their language, pastoral and other skills.

"And the fact is that violent extremists will try and step in where young people in search of guidance can't get it elsewhere. They will use religious language, religious texts and passages, seek to get a foothold in mosques and madrassas in order to spread their messages, and exploit international events such as the war in Iraq or the conflicts on Israel's borders to inflame opinion and forge a sense of grievance."

The council, which claims to represent about 500 mosques, charities and schools, today declined to comment specifically on Dr Abdullah.

More than 200 members of the council met on Saturday at Birmingham's Central Mosque to affirm their "commitment to equality and inclusiveness of the Muslim community in British society."

The meeting also reaffirmed the council's "proven and enduring repudiation of extremism and terrorism."

However, the meeting also voiced "serious alarm that the government may be in danger of adopting misguided notions of extremism as dictated by xenophobic commentators who profit from creating a hostile atmosphere from which bigots of all shades can draw," a spokesman for the council said. "A definition of extremism that would classify the overwhelming majority of loyal and law abiding British citizens as extremists would be of no value in our common fight against terrorism."

Speakers at the meeting also claimed that current anti-terrorism legislation "is so broad that anyone and everyone can be booked under the pretext of terrorism."

Some at the meeting also expressed anger at the threat of action against the council by Hazel Blears over Dr Abdullah.