Town halls are being warned they risk missing the rise of the far-right if they just focus on Islamist extremists.
The Local Government Association says attempts to prevent violent extremism must not leave Muslims marginalised.
The warning comes amid continuing concerns from councils over the impact of the government's extremism strategy.
Communities secretary John Denham signalled in August that the strategy was developing following "constructive criticism" from some local authorities.
In a speech to council chiefs on Tuesday, Councillor Les Lawrence, of the LGA, is expected to warn that strategies to prevent violent extremism could backfire.
"It is vital to make sure that our efforts to counter extremist beliefs do not leave members of the Muslim community feeling alienated and unfairly targeted," the Birmingham councillor will say.
"Focusing solely on one part of society, or being perceived to be, can only store up resentment and problems for the future.
"Many councils have expressed deep concerns that simply focusing on Muslim communities is unfair and could lead to widespread alienation.
"There remains a very real and present danger from violent extremists, but it is vital that we focus on working with young Muslim men and women rather than creating the impression that they are all part of the problem."
Targets attacked
The government's counter-terrorism strategy has four major themes, one of which is called Prevent.
At its heart is a £62m strategy, largely run by the Department for Communities and Local Govenrnment, which is designed to root out malign influences on young British Muslims.
The strategy has had some successes and support from Muslim groups, but has also met strong opposition.
Some councils have opposed a specific Whitehall target that commits them to assess how much Muslims in their area reject and condemn violent extremism, arguing it singles them out and labels the area as a terrorism hot-spot.
Earlier this year Mr Denham announced new guidance on how the 94 councils currently receiving Prevent funding should run projects.
That document acknowledged that some schemes could split communities if they were badly designed and targeted at Muslims at the expense of wider local relations.
The new guidance urges councils to bring people from different backgrounds together rather than just considering funding Muslim-led schemes.
Mr Denham has also recently launched a plan to identify tensions in predominantly white working class areas, amid evidence of a significant rise in far-right activity over the summer.
Councillor Lawrence will tell leaders at the LGA's conference on community safety that councils are now facing a balancing act.
"Councils have to be as vigilant about the far-right as they are against terrorism," he is expected to say.
"Equally, we must be alert to the risk that while young Muslims may see a focus on their community as victimisation, there are other sections of society who may falsely interpret it as favouritism."
Source: BBC News