An investigation has been launched after a leading Israeli-Arab activist managed to enter the UK despite being banned.
Home Secretary Theresa May said Sheikh Raed Salah had been excluded from the UK and the UK Border Agency was taking steps to remove him.
But his solicitor said Sheikh Salah had "no knowledge" of a travel ban and had not tried to conceal his identity.
Shadow home secretary Yvette Cooper accused the government of incompetence.
Sheikh Salah has Israeli citizenship and is the leader of the Islamic Movement in Israel.
The movement, whose stated aim is to advocate Islam among Arab Israelis, offers education and social services and promotes a Palestinian nationalistic stance.
Sheikh Salah was detained by police late on Tuesday evening in London after he returned from a meeting in Leicester, where he had addressed a 500-strong audience.
The Home Office said he had been accused of making anti-Semitic remarks and was not allowed into this country because his presence would be "not conducive to the public good".
The Palestine Solidarity Campaign (PSC) said he was the leader of a legitimate political organisation.
PSC director Sarah Colborne said he rejected all forms of racism, including anti-Semitism.
"This is a legitimate organisation, which Israel has never moved to ban," she said.
"Before coming to Britain, he faced horrific allegations of anti-Semitism, which he completely refuted.
"He has clarified his position of being opposed to all forms of racism, including anti-Semitism, Islamophobia and racism against his own people, the Palestinians."
Mrs May said although the government did not normally comment on individual cases, in this case it was important to do so.
"I can confirm he was excluded and that he managed to enter the UK. He has now been detained and the UK Border Agency is now making arrangements to remove him.
"A full investigation is now taking place into how he was able to enter."
But Labour's Yvette Cooper said the government's rhetoric of being tough on border controls had been "exposed as an incompetent sham", amid planned cuts of 5,000 UKBA jobs.
"The Home Secretary needs to urgently explain why an individual banned from this country was allowed to walk in and instead of being stopped at the border had to be pursued by the police instead.
"Only this week Theresa May said that coming to this country was a privilege and she would refuse entry to Britain of anyone that she deemed not conducive to the public good. Her words now ring very hollow indeed."
Israel's Arab community numbers about 1.4 million, some 20% of the population. It includes Palestinians who remained in Israel after the 1948 establishment of the Jewish state and their descendants.