Universities, teaching staff, students and unions have warned advice urging them to target Islamic extremism on campuses could be counter-productive.
Higher Education Minister Bill Rammell issued practical guidance on Friday about tackling the promotion of "extremism in the name of Islam".
Officials believe there is a serious, although not widespread, threat of violent extremism on campuses.
But unions warn that "demonising Muslims is unacceptable and dangerous".
The Department for Education and Skills insists the new guidance is not about targeting Muslim students and says it decided to issue the advice after discussions with universities, Muslim students and law enforcement agencies.
It aims to promote safety in educational institutions, ensure that staff and universities are taking the matter seriously and boost community cohesion.
But a joint statement from the National Union of Students, University College Union, Unison, the Federation of Student Islamic Societies and the Equality Challenge Unit said singling out Muslim students could "jeopardise trust and confidence between staff and students".
It continued: "Any implementation should recognise that demonising Muslims is unacceptable and dangerous - whether in educational institutions or in communities.
"Students and staff should be assured by their institutions that there is no intention of adding to a climate of Islamophobia."
Universities UK said violence had no place on university campuses but also hit out at the singling out of Muslims as a group in the guidance.
It pointed out that its earlier guidance on tackling the issue focused on "all kinds of extremism, not just on extremism in the name of Islam".
"Universities are some of the most diverse communities in the UK, and work hard to ensure community cohesion on campus across all faiths and racial groups," the university umbrella group said in a statement.
Mr Rammell said there was a real and serious threat but said he did not want colleges to start spying on students.
"There is a serious issue here, we do have to face up to it, but this is also about building community cohesion on our campuses," he told the BBC.
"This is about talking to them, it is about listening to their concerns and it is about working with the vast majority of all students, Muslim and non-Muslims alike, who oppose extremism."
UCU joint general secretary Paul Mackney said universities needed straightforward procedures on what to do if anyone suspects violent extremism or terrorist activity.
He added: "But radicalism must not be conflated with terrorism. Institutions must maintain a moderating environment where discussion flourishes."
Intelligence and security expert Professor Anthony Glees, who published a report last year warning of the risks of students being radicalised, said he believed there should be far more checks on students from abroad.
In October, the BBC reported that the radicalisation of students by Islamist groups was a growing problem on some university campuses.
Senior academics warned that the authorities were doing little to tackle the problem.
But the Federation of Student Islamic Societies insists radicalism is not widespread.
Head of student affairs Faisal Hanjra said he believed such a step was not generally useful because it tended to exaggerate the threat and blow the issue out of proportion.