David Blunkett has told MPs a new law targeting "incitement to religious hatred" will not curtail free speech.
The comedian said he was worried about freedom of speech
He said the measure "will not criminalise material just because it stirs up ridicule, prejudice, dislike, contempt or anger".
The plans have come under fire from comedian Rowan Atkinson who is worried that the powers will stop him telling jokes and satirising people's beliefs.
The Tories oppose the plan and the Lib Dems have "serious doubts" over it.
Mr Blunkett told MPs it was to protect people who "feel threatened ... and feel society is not embracing them".
He said: "We are trying to stop groups of people who are prepared verbally, in writing and through the internet, to incite others to hate because of someone's faith
not because of the argument about their faith."
He added that it would not stop people from making jokes about religion.
But Tory spokesman David Davis said his party would seek to remove the section on incitement to religious hatred from the bill.
He said the plans if implemented would be "profound and wide-reaching, and not necessarily that intended".
"The danger is that this legislation will curb freedom of speech without any benefit being realised from the legislation," said Mr Davis.
For the Lib Dems, David Heath said it was "absolutely unacceptable" for anyone to promote hatred against any group of people because of their religion which, he added, was "often a cipher for racial hatred in another form".
"But that doesn't stop me having serious doubts about the form the government has chosen to bring forward this legislation."
On Monday, Blackadder star Rowan Atkinson launched a comedians' campaign against the plan.
The Mr Bean actor says it is "wholly inappropriate" and could stifle freedom of speech.
Speaking at Westminster, Mr Atkinson was backed by a group of writers, MPs and the National Secular Society.
They oppose part of the bill which will create a new offence of incitement to religious hatred to protect faith groups, particularly Muslims, from attack.
There are already enough laws to deal with such extremists, they say.
Mr Atkinson told a meeting at the House of Commons on Monday night there are "quite a few sketches" he has performed which would come into conflict with the proposed law.
He added: "To criticise a person for their
race is manifestly irrational and ridiculous but to criticise their religion, that is a right. That is a freedom.
"The freedom to criticise ideas, any ideas - even if they are sincerely held beliefs - is one of the fundamental freedoms of society.
"A law which attempts to say you can criticise and ridicule ideas as long as they are not religious ideas is a very peculiar law indeed."
Comedians are worried about freedom of speech
He said he had sympathy with the law's backers, particular British Muslims, but added: "I appreciate this measure is an attempt to provide comfort and protection to them.
"But unfortunately it is wholly inappropriate response far more likely to promote tension between communities than tolerance."
Other parts of the bill would put on a formal basis the practice of giving lighter sentences to offenders who give evidence against accomplices.
And there would be a new law to stop trespassing on specified royal and government property - a response to the "comedy terrorist" who managed to get into Prince William's birthday party at Windsor Castle last year.