The government's anti-radicalisation strategy, Prevent, is "ineffective and counterproductive" and should be withdrawn, according to a new report.
Racial equality organisation JUST Yorkshire says it is "built on a foundation of Islamophobia and racism".
The report was based on interviews with 36 people including students, faith leaders and academics.
The Home Office said it was one of a number of reports to "peddle falsehoods and create myths".
A Prevent coordinator also questioned its methodology, saying the document was "confusing".
Created in 2003, Prevent is one of four strands of the government's counter-terrorism strategy, known as Contest.
According to the Home Office, its aim is "to stop people becoming terrorists or supporting terrorism".
It aims for police and other organisations to build relations across the UK and requires faith leaders, teachers, doctors and others to refer any suspicions about people to a local Prevent body.
The scheme has been criticised by some MPs, the National Union of Teachers and Muslim Council of Britain, while JUST Yorkshire says it has a "disproportionate and and discriminatory" focus on Muslim communities.
Report author Dr Waqas Tufail, said: "Our independent report has engaged with grassroots perspectives and has highlighted the many harms of Prevent, particularly those impacting on Muslim minorities.
"[Prevent] is broken, it's counterproductive and I think there is a lack of accountability.
"This strategy has been in place for over a decade and there's been no discernable impact."
However, Hifsa Haroon Iqbal, a Prevent coordinator, criticised the report's methodology.
She said: "To base your judgment on an interview with 36 people, to state what actually is very much more opinions from newspaper reports and to claim that a strategy that has been working for a number of years is broken, I think, is misrepresenting it and is confusing people."
'Bullies or terrorists'
Asked about the sample size, Dr Tufail, a senior lecturer at Leeds Beckett University, said some academic studies used as few as 10 to 20 people.
Security Minister Ben Wallace MP said: "The Prevent duty sits alongside the duties to protect people from sexual, bullying or criminal manipulation.
"As a parent, if my children were being targeted by bullies or terrorists or paedophiles at school I would expect that such occurrences were reported and dealt with.
"But this report seems to suggest such reporting be stopped when it relates to exploitation by terrorists."