London, UK - The government's flagship strategy to stop young people becoming terrorists has suffered from a "lack of clarity", the communities secretary has said.
John Denham used a speech to defend the "Prevent" strategy - but also conceded that some parts of it had to change.
The Prevent strategy has been dogged by controversy over its aims and claims by some Muslims they are being spied on.
The programme to prevent violent extremism by working with communities emerged after the 2005 London bombings.
Prevent is one of the major planks of the government's counter-terrorism strategy, known as Contest, designed to combat al-Qaeda-inspired violence and radicalisation.
About £20m is being spent annually on Prevent programmes, many of them administered by local authorities. Some more sensitive projects come under direct Whitehall control.
Muslim community organisations have been split over Prevent, with some willing to work with government - but others denying that there is even a problem that needs addressing.
Meanwhile, competition between organisations to prove to government that they are best placed to prevent extremism has raised questions about the credibility and independence of some of those bidding for funding.
At least one council initially refused to touch the money because it believed that the programme's title was enough to damage local race relations.
'Limited effectiveness'
In a speech in Birmingham, Mr Denham acknowledged that Prevent had faced criticisms, including that it was both too hard and too soft. Some of the criticisms and controversies had "unnecessary limited its effectiveness".
"Where we have heard constructive criticism, we have been willing to listen and change in order to ensure that prevent is more effective. If prevent is enveloped in suspicion or misunderstanding, it simply won't work."
"There are fears and confusions about Prevent and what it is really trying to achieve. Prevent cannot work as a Government programme imposed on Muslim communities. They need to feel ownership of the community based parts of prevent and work as full partners in it.
"Government will not row back or dilute our commitment to Prevent but is looking at how best to strengthen that work to make it most effective."
One lobby group recently published what it called a comprehensive study of how Prevent had been used to demonise and spy on Muslims and attempt to change their religious views.
But Mr Denham flatly denied the accusation, saying that the strategy was solely focused on preventing crime and protecting communities.
"[There is a fear that] by joining a Prevent activity, the organisers or the participants are opening themselves up to covert surveillance, intelligence gathering and the collection of files on the Muslim communities," he said.
"I want to be very clear. We must have complete openness and transparency.
"There should not be any information gathering or information sharing about the community aspects of Prevent work which cannot be openly acknowledged with all members of the partnership and the wider community."
Mr Denham's department issued new guidance in August telling councils to broaden their strategy to include a rise in right-wing racism and, where needed, drop terms of labels that could alienate Muslim communities who they need to work with.
But shadow communities secretary Caroline Spelman said; "The government's U-turn on its flagship Prevent strategy only proves what the Conservatives have been saying all along.
"We warned DCLG that Prevent strategy funding has unintended consequences. A future Conservative government would shift the emphasis of funding to groups which bring the community together, rather than single group funding which is divisive."