The fair was promoted extensively in the Thames Valley area
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An Islamic cultural fair in Reading has been cancelled over "security fears".
The council contacted organisers to say that the festival could not go ahead on 10 September in Prospect Park due to "heightened security concerns".
But in a statement, representatives of the Muslim community in the town said the decision was "shocking, disturbing and upsetting" for local people.
They claim the council is putting up a "smoke screen" and it should explain the real reasons for the decision.
Supt Steve Kirk, from Thames Valley Police, told the BBC: "In relation to this matter, the police passed on information from the community to the local authority that could question the intention of the organiser.
"We believe this may warrant further investigation by the local authority."
A spokeswoman from Reading Borough Council said: "The council has a responsibility for community relations, and it is with this in mind that the decision was taken at this time to cancel the event due to be held in Prospect Park."
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Questions posed to the council by Muslim leaders in an open letter
What was the precise rationale for objection to the fair?
Who were the originators of the objection?
Why did the council take such a blunt approach for communicating the cancellation?
Will the council compensate the organisers for the thousands of pounds of costs incurred in preparation and promotion?
How exactly does the council believe that such mistreatment of the Muslim community will safeguard "community relations" and contribute to goodwill?
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"The decision was reached in light of the heightened security concerns, and community tensions, over the last three weeks."
"The chief executive has offered to meet with the organisers of the event early next week to discuss their concerns," she added.
But Omair Zaman, one of the organisers of the fair, told BBC News: "Rather than enhancing community relations the council is working against that by cancelling this fair.
"This fair was welcoming all - Muslims and non-Muslims - and would have given an opportunity for all to interact in a safe and vibrant environment."
"These type of events have been going on across the country in towns and cities across the UK throughout the summer.
"It seems like the council has cancelled this event without any prior consultation with us."
In an open letter leaders of the Muslim community have asked the council to explain the real reasons for their decision.
The letter stated: "For Reading Borough Council to then send a written notice ordering a cancellation of the event booking is shocking, disturbing and upsetting for many within the community.
"The vague reason given of 'community tensions' may appear to be a smoke screen to hide what would have been a late objection from a certain party (or parties)."