The British Prime Minister's speech, delivered at a security conference in Munich at the weekend, is his first major public foray into the vexed subject since the election last year and called on Britain to end its acceptance of divided and isolated ethnic communities.

But his careful explanation and call for a fresh doctrine of ''muscular liberalism'' and a greater willingness to argue and ''defeat'' extremist ideologies came just hours before a well publicised and planned rally by the far right in Luton, north of London, providing fuel for 3000 chanting supporters of the English Defence League.

TV and newspapers covered the arrival of busloads of EDL supporters while at the other end of the town square, counter protests led by Muslim groups and left-wing students massed before a phalanx of 2000 police.

Labour's justice spokesman, Sadiq Khan, said Cameron's speech amounted to ''writing propaganda'' for the EDL, while the former Home Secretary, Jack Straw, described it as ''ill timed and ill judged''.

Yesterday Downing Street insisted that the speech had been written months before .

Cameron's speech was considered and carefully balanced, highlighting the distinction between Islam and Islamic extremism but strongly criticising the past, passive state response to the recruitment of extremists from publicly funded institutions such as universities and prisons.

All Britons should embrace values of freedom and equality, actively promote them and in schools teach elements of a common culture and curriculum while encouraging migrants to learn English. But there should be a robust intolerance of groups who were opposed to universal human rights.

And while he questioned the encouragement of policies that facilitated different cultures' choices to segregate themselves and live separate lives - and used the world multiculturalism to describe this - he did not criticise or question the promotion of diversity, in culture, language or religion.

He solidly rejected the right-wing mantra that multiculturalism or an excessive deference towards different cultures had created terrorists, highlighting the fact that those who committed the terrorist bombings in London in 2005 were not the product of an impoverished and isolated Muslim community. Rather, he said, ''many of those found guilty of terrorist offences in the UK have been graduates, and often middle-class''.

But Cameron is a canny politician who has clearly read the wind in Britain and on the continent and as austerity measures continue to bite among working class communities - and the fear of terrorism escalates - alienation is growing among white voters.

He argued that racism and intolerance should be condemned, and that it was possible that Britons had become a little ''too cautious, too fearful, to stand up to equally unacceptable views or practices … from someone who isn't white''.

A call for ''hard nosed, unambiguous'' assertions of liberal values was indeed timely. But the linking of two entirely separate issues - the problem of Islamic terrorism - with Britain's rich, cultural diversity may turn out to be a fundamental mistake.