The government's Prevent strategy, aimed at tackling violent extremism, is seen as "divisive by some" in Bradford, according to a city council report.
It found right-wing activity and the case of three Bradford sisters who took their children to Syria had increased concerns of community tensions.
It also said measures had been taken to improve the "transparency and accountability" of Prevent.
Council Leader David Green said people had "lost faith" in the scheme.
The Labour councillor added: "One of my criticisms is that it has become tainted and people have lost faith in it.
"We need to build something locally from the ground up to try protect everybody in our community." [BBC] Read more