The government's approach to terrorism is creating an atmosphere of suspicion and unease, the head of the Muslim Council of Britain has said.
Dr Bari said Britain could learn a lot from Muslims
Muhammad Abdul Bari told the Daily Telegraph the amount of debate relating to Muslims was disproportionate.
He cited Nazi Germany in the 1930s as an example of how people's minds could be poisoned against a community.
The Home Office said it would not allow terrorists to undermine the UK's long history of strong community relations.
Scaring the community
Dr Bari's remarks follow recent comments from MI5 chief Jonathan Evans that there are 2,000 people living in the UK who pose a terrorism-related danger, and that youngsters aged 15 are being groomed to be suicide bombers.
Dr Bari told the paper: "There is a disproportionate amount of discussion surrounding us.
"The air is thick with suspicion and unease. It is not good for the Muslim community, it is not good for society.
He added: "I think it is creating a scare in the community and wider society. It probably helps some people who try to recruit the young to terrorism."
Inayat Bunglawala, the council's assistant general secretary, agreed - telling BBC Radio 4's Today programme there was a danger of the terror threat being magnified "out of all proportion".
"What you had in the 1930s was all sorts of popular fictions were spread about the Jewish community that they were responsible for all ills that were occurring to Germany.
"They were made into folk-devils, and I think there is a danger that the word Muslim in the UK is becoming synonymous with bad news."
Farmida Bi from the Progressive British Muslims organisation agreed that British society as a whole could benefit from adopting some of the teachings of Islam.
"A lot of what it says is relevant and important to our society today, but at the same time Muslims have to acknowledge that the West has an awful lot to teach the Muslim community as well," she said.
"The importance of democracy, the importance of the individual, I think it's very much a two way street."
Sir Paul Lever, former chairman of the joint intelligence committee, told Today that Jonathan Evans had a duty to warn the public.
"One can't deny the facts, and the facts are that al-Qaeda-inspired Islamist terrorism - and I use the term Islamist, not Muslim or Islamic - is the biggest threat that our country faces today," he said.
He added: "We mustn't demonise the whole Muslim community. It is a very, very tiny minority who are involved. But though 2,000 people may be a tiny proportion, it is still, in absolute terms, an alarming threat."
A Home Office spokesman said anti-terror laws were not aimed at a particular race, religion, or group.
He said: "They are aimed at terrorists, whatever background or section of society they may come from.
"We must continue to work with the Muslim communities to increase their sense of inclusion," he added.
'Learn from Muslims'
In a wide-ranging interview with the Telegraph, Dr Bari also spoke of how he wanted to integrate British and Muslim cultures, but said this must work both ways.
"Everybody can learn from everyone. Some of the Muslim principles can help social cohesion - family, marriage, raising children with boundaries, giving to the poor, and not being too greedy," he said.
And he said that while there was no justification for suicide bombing, suicide bombers were victims as well as aggressors.
"Children come to hate when they don't get enough care and love. They are probably bullied, it makes a young person angry and vulnerable... the people who become suicide bombers are really vulnerable."
The Muslim Council of Britain is an umbrella group representing over 500 Muslim organisations in the UK.
It has been close to government in the past, but relations between the two appeared to cool last year.