The government will create local intelligence profiles on the activities of extremists across the country.
Home secretary Jacqui Smith announced that the Counter Terrorism Local Profiles will detect radical preachers and hate groups, in an effort to prevent 'impressionable' Muslims from turning to violence.
Under the latest guidance from the Association of Chief Police Officers (ACPO), senior officers will share "sensitive information" with council chief executives.
Smith warned local authority leaders not to give publicity to radical groups even if they do not actually promote violence directly.
She also encouraged the public to alert the relevant authority if they suspect someone of extremist behaviour.
The home secretary made her statement at a conference for police, council leaders and Muslim groups in central London to relaunch the government's ‘Prevent’ strategy, targeting the roots of radicalism.
She said: "[Extremist groups] may not explicitly promote violence, but they can create a climate of fear and distrust where violence becomes more likely."
She claimed that the groups "cynically skirt the fringes of laws that rightly defend free speech to promote hate-filled ideologies".
Smith added: "The police and the Security Service are working all-out to disrupt and negate that threat. But we also need the public to remain vigilant - to trust their instincts; to pass on information to the police and to keep our shared responsibility to help keep each other safe."
Groups such as Hizb ut-Tahrir carefully avoid advocating violence within Britain but still champion extremist views.
Communities secretary Hazel Blears explained that it was "not just" Hizb ut-Tahrir that the government strategy was targeting.
Blears argued: "These groups are seeking to sow division between people and whipping people up in to some kind of frenzy."
"The responsibility of the local authority is to bring communities together. If you are hosting and giving air to people who are diametrically opposed to what you are doing it's right to be concerned about it."
Blears added that councils should not be allowing these facilities to be used.
Following a £6m Prevent pilot, a report warned last month that councils and police leaders had not shared their information with each other effectively.
Over the next three years, local authorities and police forces will receive £45 million from government to fund the strategy.
Blears claimed that this money should "permeate" all their work.
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