The Government’s embattled anti-terror policy came under renewed attack from ministers’ own Muslim advisers today with the publication of the final report from a task force set up after the July 7 London bombings.

The task force, which was split into seven different panels, made various recommendations, including that Britain's Muslim Imams take to the streets and the internet to fight extemism. Its report was published the day after Tony Blair's Government suffered its first Commons defeat over a proposal to allow police to hold terror suspects for up to 90 days without trial.

If the task force's own proposals are accepted, leaders of the Muslim community will launch roadshows and set up websites to tackle the extremists, who have themselves used the web and public meetings as tools to recruit disaffected young adults to their cause.

But the task force, which included prominent Muslim figures ranging from members of the House of Lords to Yusuf Islam - the former pop singer Cat Stevens - was critical of UK foreign policy, which it said was a factor in stoking anger among Muslims.

The tast force report was also critical of Government plans to ban certain Islamic organisations, warning that this would send the organisations underground and make them "more problematic in the future". Two radical Islamist organisations, Hizb ut-Tahrir and al-Muhajiroun, are among those to be banned under the Terrorism Bill.

The report also attacked the Bill’s controversial plan for a new offence of "glorifying terrorism".

"The proposal ... as currently formulated could lead to a significant chill factor in the Muslim community in expressing legitimate support for self-determination struggles around the world and in using legitimate concepts and terminology because of fear of being misunderstood and implicated for terrorism by authorities ignorant of Arabic/Islamic vocabulary," said the report.

"This would not only result in an inappropriate restriction around the practice of Islam but also its development in the present context."

It was also unclear why the Government needed to create another new offence of "acts preparatory to terrorism", the report went on.

The task force concluded that extremists have found recruits among young Muslims "fuelled by anger, alienation and disaffection from mainstream British society".

Extremist groups are operating in schools, prisons and universities where they are shouting down "mainstream Muslim organisations that are perceived as pedestrian, ineffective and part of the system," says the 100-page report.

It sets out practical steps to be taken to counter extremism and its underlying causes. It is hoped that it represents a first step in a longer-term partnership between the Government and Muslim communities.