In a statement released on Saturday, the Home Office said its $230m Preventing Violent Extremism strategy did not engage in covert intelligence-gathering on potential terrorists.
"Any suggestion that Prevent is about spying is simply wrong," the Home Office said.
"Prevent is about working with communities to protect vulnerable individuals and address the root causes of radicalisation."
Launched in 2006, the programme's mission was to fund projects aimed at rejecting extremist ideology and employing youth workers and teachers to help young Muslims deemed vulnerable to radical organisations.
But in a critical report, the Institute of Race Relations claimed the programme has, in effect, established "one of the most elaborate systems of surveillance ever seen in Britain".
Arun Kundnani, the report's author, concludes that far from tackling extremism, Prevent actually fostered division, mistrust and alienation.
"The Prevent progamme constructs the Muslim population as a 'suspect community' ... encourages tokenism, facilitates violations of privacy and professional norms of confidentiality, discourages local democracy and is counter-productive in reducing the risk of political violence", Kundnani said.
Source: Al Jazeera (English)