Ruth Kelly announced a £5 million fund yesterday for local councils to fight Muslim extremism, admitting that the Government had taken the wrong approach to community relations in the past.

The Communities Secretary said that the “battle for hearts and minds” cannot be won from Whitehall as she set out fresh guidance on the role that town halls can play.

She said that, after the arrest of nine terror suspects in Birmingham last week, action was even more urgently needed. “In the past, Government has relied too much on engagement with traditional leadership organisations. As the events of the last week show, community tensions are high in some parts of Britain and the security threat remains serious,” she said About fifty local authorities — mainly in Britain’s large cities — are working with local Muslim communities to devise new approaches to be funded by the Pathfinder scheme cash.

The plans include: Working with young Muslims excluded from schools, colleges and mosques and vulnerable to “grooming” by extremists to help them to “turn their back on extremism” Training for imams and Muslim women to “face down” extremist messages New local forums against extremism with strong local leaders and role models to promote “shared values” Inter-faith school twinning programmes and volunteering opportunities for young Muslims to help them to “develop a greater sense of shared belonging” Extra training and information for local institutions such as mosques on how to spot and prevent extremist activity It is part of a wider government effort to prevent a repeat of the July 7, 2005, attacks in London in which 52 innocent people were killed in suicide bombings. Over the next few months, Ms Kelly will also meet former extremists who were persuaded by such community efforts to return to the mainstream.

“We can’t win the battle of hearts and minds from Whitehall, it can only be won in local communities. But we can provide more support and strategic leadership,” she said.

Mr Blair made clear yesterday his determination to “stand up” to Islamist extremism at home and abroad.

“Winning hearts and minds is not just about reaching out to people. It is also sometimes about standing up to them and saying, ‘Your value system is a value system that is wrong’,” he told the Commons Liaison Committee.

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