A new generation of Muslims is being radicalised using the very Government funds that are supposed to be fighting the problem, a new report by the Policy Exchange think-tank says.
An obsession with talking to extremists means that moderates are being ignored, leaving the stage clear for radicalisation, according to the report.
The Government is "underwriting the very Islamist ideology which spawns an illiberal, intolerant and anti-western world view" the report says.
"Political and theological extremists, acting with the authority conferred by official recognition, are indoctrinating young people with an ideology of hostility to western values."
The Policy Exchange says the Government has made a "strategic error" that is "born of a poverty of aspiration," and the result has been to "empower reactionaries within Muslim communities and to marginalise genuine moderates."