Extremist Muslim "bullies" must be faced down, John Reid told the Labour conference in a speech which heightened speculation of a leadership bid.
Mr Reid, centre, may yet decide to challenge for leadership
Mr Reid, recently heckled when he urged Muslim parents to guard against their children being radicalised, said: "We will not be brow beaten by bullies."
The home secretary did not explicitly say he would challenge Gordon Brown for the right to succeed Tony Blair.
But he made clear he was ready to take the tough decisions leaders have to.
Mr Reid is seen as one of the very few heavyweight figures who might challenge the overwhelming favourite, Chancellor Gordon Brown, for the Labour leadership.
He referred to that speculation by joking that he had not seen any reason to stand until ex-deputy leader Roy Hattersley said he would shoot himself if Mr Reid became PM.
Returning to the leadership contest subject at the end of his speech, he urged Labour to show a unity of purpose and common endeavour when the prime minister stepped down.
"Leadership isn't a zero sum game," he said.
"When one of us shines it doesn't diminish the others, it reflects on all of us. I pledge to you that I will play my part in that common endeavour."
Length: 33 mins
Standing ovation: 41 secs
Applause: 30 rounds of applause during the speech
Best joke: "Until Roy Hattersley said he would shoot himself if I became prime minister, I had not been able to see any possible advantage in standing."
Nick Assinder's verdict: "It was a textbook example of how to pitch for the leadership without delivering a leadership speech."
He also attacked David Cameron's Conservatives for failing to show leadership by "talking tough and voting soft" on crime and immigration.
He added: "If they won't lead, we will."
Mr Reid said Tony Blair had asked him to review Britain's counter terrorism capacity in the light of this summer's alleged plot to blow up trans-Atlantic planes.
"We agree that we need a radical step change to ensure that there is a seamless co-ordinated approach to the now seamless threat," he said.
His review of the Home Office, which he branded dysfunctional when he became home secretary, set out the priorities for his department.
Mr Reid said he wants to show that Labour values of fairness underpin all his department's work in fighting crime, controlling immigration and keeping terrorism and extremism at bay.
Specific plans for new laws to protect national security would be set out in the Queen's Speech this autumn.
Mr Reid said Muslims were "owed our support" and he insisted there was no clash of civilisations.
"It's not Muslims versus the rest of us," he said. "It's evil terrorists on one side against all civilised people on the other."
And he said his recent controversial visit to Waltham Forest in east London may have been his first visit but it would not be his last.
"Because if we in this movement are going to ask the decent, silent majority of Muslim men - and women - to have the courage to face down the extremist bullies, then we need to have the courage and character to stand shoulder to shoulder with them doing it."
He said there would be no "no go" areas: "We will go where we please, we will discuss what we like."
Mr Reid argued that global alliances were needed to fight terrorism, which meant Labour members overcoming some misgivings with the UK's friendship with President Bush.
He said the UK should tell President George Bush when he was wrong on climate change, stem cell research, civil partnerships and tax cuts.
But people should also remember they were engaged in a common struggle.
"You don't have to love everything George W Bush stands for to hate everything that Osama Bin Laden stands for," he said.