A key government programme to counter Islamist extremism has given money to groups that have promoted radical ideas, according to a new report.

The TaxPayers’ Alliance, a ginger group monitoring public spending, says that the government should consider scrapping “Preventing Violent Extremism”, known as Prevent, a £50 million-plus scheme which is part of its anti-terrorism strategy.

The TPA, analysing more than £12 million spent on Prevent so far, accused the government of leaving it up to ill-equipped local councils to allocate the money.

Matthew Sinclair, TPA research director, said: “Giving councils millions of pounds to dole out to hundreds of community groups clearly creates a massive risk that money will be wasted or finance groups hostile to Britain’s liberal, democratic values.”

He added: “The government has failed to avoid endorsing or funding radicals in the past and as such, it’s totally unrealistic to expect local councils to be able to assess which groups warrant funding.”

More than £800,000 has gone to affiliates of the Muslim Council of Britain, an organisation whose behaviour “raises serious questions” over whether groups linked to it should receive funding, the TPA said in a paper accompanying the report.

It highlighted the MCB’s boycott of the national Holocaust Memorial Day commemoration this year and its deputy secretary general, Daud Abdullah’s signing of the Istanbul Declaration (an extremist anti-Zionist charter).

It claimed that an event had taken place earlier this year at one recipient of Prevent money, the London Muslim Centre, featuring a video of Anwar al-Awlaki — author of a pro-Jihad pamphlet suggesting that Muslims pray for martyrdom or go for arms training abroad if they are unable to do it in their own country.

The TPA paper linked another Prevent beneficiary to a course addressed by the radical cleric Sheikh Yusuf Al-Qaradawi.

Susie Squire, the TPA’s political director, also criticised “silly” grants to football projects run by Charlton Athletic and other clubs, saying they were “not a legitimate tool in the fight against terrorism”.

Last month John Denham, the Communities Secretary, announced that he was adding another £7.5 million to the £45 million earmarked for Prevent over three years. The programme’s effectiveness is the subject of an inquiry set up two months ago by the Commons’ communities and local government committee.

Ms Squire said that the government did not have a central body scrutinising Prevent spending and that the TPA had obtained its data only by Freedom of Information requests to local councils.

“A lot of people will have a big problem with the fact that the government has made this money available and then closed its eyes and hoped for the best,” she said.

Mark Gardner, communications director of the Community Security Trust, said that Prevent was “still a relatively new project and we hope that lessons can be learnt in order to improve its effectiveness. Nevertheless, we share the TaxPayers’ Alliance’s concerns about the suitability of some of the groups receiving funding”.

Ed Hussein, of the Quilliam Foundation, an anti-radical-Muslim think-tank, said in an online article that the report “reveals that many groups that have received handsome grants of taxpayers’ funds are groups whose leading members include supporters of hardcore Islamist ideologies”.

He said: “The government needs to begin working with Muslim partners who will actively contribute towards making British society more cohesive and harmonious — rather than groups that can only promise not to actively sabotage such aims.”

But a spokesman for the MCB accused the TPA of “going down the xenophobic route of casting British Muslim groups as ‘hostile to Britain’s liberal, democratic values’ and insinuating that they are terrorist”.

The report uses “smears attributed to the MCB to criticise the Prevent strategy”, he said. “The allegations are contested. The MCB has consistently made the point that there is no contradiction between Islam and Britain’s liberal democratic values.”

The TPA report also reveals that one £5,000 Prevent grant has gone to a fashion project for Muslim schoolgirls to be run by the Three Faiths Forum.