Conservative leader David Cameron has said the government is not doing enough to fight Islamist extremism in the UK.
He criticised a funding freeze planned for the Home Office, and said intercept evidence should be allowed in courts.
And he called for tougher action to deport "preachers of hate" and enforce existing anti-terror laws.
But deputy prime minister John Prescott said the comments were "almost beyond belief" and "undermined unity" at a time "when we should all stand united".
Speaking at a specially-convened Westminster news conference, Mr Cameron said an apparent attempt by "alleged British-born Islamist terrorists" to blow up passenger jets was "deeply shocking" but "not surprising".
He added: "I do not believe that our government is doing enough to fight Islamist extremists at home or to protect our security."
He called for greater investment in the police and security services.
But he cautioned against further legislation, saying existing anti-terror laws should be enforced and strengthened where necessary.
"Why have so few, if any, preachers of hate been prosecuted or expelled, with those that have gone having done so voluntarily?," said Mr Cameron.
"And why has so little been done to use the existing law to deal with the radicalisation that is rife within our shores?
"On community cohesion, we need firm leadership from moderate Muslim opinion, and leadership from the government.
"In particular, we need follow-through when the headlines have moved on."
Instead of the government's favoured 90 day detention of terror suspects, and ID cards, there should be "a more hard-nosed defence of liberty", said Mr Cameron.
In response to the speech Mr Prescott said: "David Cameron's remarks are almost beyond belief. At a time when we should all stand united in the face of alleged terrorist threats, he seeks to undermine that unity.
"All of Britain's communities are potential victims of the plans of terrorists and we will only defeat them if we remain united as a country. "His claim that we haven't done enough has to be judged against the Tories failure to support many of the measures that we have introduced to fight terrorism."
Labour MP Shahid Malik said Mr Cameron's words showed "how out of depth he really is in his new role".
"The truth is that every attempt we have made as a government to bring forward legislation to counter terrorism has actually been blocked or attempted to be blocked by David Cameron and the Conservatives, " Mr Malik told BBC News.
In other comments, Mr Cameron criticised an open letter from prominent Muslims, including Mr Malik, calling for a rethink of British foreign policy, saying it was "gravely mistaken".
Backing the governnment's position, he said British foreign policy could not be "held to ransom" and if people wanted change they should pursue it through democratic means.
"There is never, ever, a justification for strapping explosives to yourself, or someone to someone else, and blowing something up because you don't like your government's foreign policy," the Tory leader said.
He also said Prime Minister Tony Blair was "broadly right" to talk about "an arc of extremism" stretching across the Middle East, adding it was a "great challenge of our times and one we are ready to face".
On the Middle East, Mr Cameron said Israel had the right to defend itself, but said "elements" of its recent actions had not been "proportionate".
He backed "a robust" international force to deliver security.
"Our recognition of the need to bolster democracies abroad does not mean that we endorse disproportionate or ill-conceived actions, or that we will adopt a one-sided view.
"Of course we recognise the right of Israel to defend itself against attack.
"But, as William Hague rightly pointed out, the measures taken to achieve that defence ought, in the interests of Israel and of the long term peace of the region, always to be proportionate."
Earlier this month Mr Hague was attacked by Lord Kalms, a leading Conservative donor and prominent member of Britain's Jewish community, who described his words as "downright dangerous" and accused Mr Hague of behaving like an "ignorant armchair critic".
Mr Cameron, who was flanked by members of his shadow cabinet, hit back at criticism of his attempts to modernise the Conservative Party, saying he would be announcing further changes on Monday.
The so-called "A-list" of preferred candidates has been criticised for failing to increase the number of women and ethnic minority candidates being selected for winnable seats.
In a separate development, Mr Cameron is to spend four days later this month in India, visiting factories and call centres in Mumbai and elsewhere.