James Brokenshire, the communities secretary, told the House of Commons the definition put forward by the All-Party Parliamentary Group (APPG) on British Muslims needed “more consideration”.
“It is clear that with such a complex issue we need to interrogate this further as a matter of urgency,” he added.
“That’s why we will be appointing two advisers and ensuring this reflects the need for community representation … our priority is to arrive swiftly at a collective position.”
Mr Brokenshire told MPs the definition proposed by the APPG was not in line with the Equality Act 2010, had “potential consequences for freedom of speech” and that the combination of race and religion would cause “legal and practical issues”.
“It is vital that we get this right, that any definition reflects the experience of those who have experienced hatred because they are Muslims, and that we can be satisfied it will have a positive effect,” he added.
“With the best of intent, the APPG definition does not yet meet this and further work and consideration is needed.”
The government had previously indicated its rejection and said the APPG’s definition had not been “broadly accepted” in the way the International Holocaust Remembrance Alliance definition of antisemitism had.
Police leaders have raised concerns that the proposed definition of Islamophobia would undermine counterterror operations and threaten freedom of speech.
After a six-month inquiry taking evidence from Muslim organisations, legal experts, academics and other groups, the APPG on British Muslims had called on the government to adopt the definition: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.”
It has been adopted by parties including Labour, the Liberal Democrats, Plaid Cymru, Scottish National Party and Scottish Conservatives, and backed by 750 Muslim organisations and institutions.
Wes Streeting, the co-chair of the APPG on British Muslims who called the debate, accused the Conservative Party of making the “same mistakes” on Islamophobia as Labour had on antisemitism.
“There is a deafening silence of decent people in the Conservative Party on racism in their ranks,” he told MPs.
“It is not just the responsibility for Muslims to tackle Islamophobia, it is the responsibility for us all.”
Mr Streeting said the proposed definition did not prevent criticism of Islam, hamper counterterror work or enable “false flag accusations of Islamophobia to shut down debate”.
He accused the government of having “neither the wisdom nor the credibility” to draw up a new definition, adding: “British Muslims deserve better than this.”
Dominic Grieve, the former attorney general and chair of the Intelligence and Security Committee, urged his own party to “show leadership”.
The Conservative MP dismissed parts of a Policy Exchange report that claimed the definition would “cripple counterterrorism” as “total and unadulterated rubbish”.
“It is beyond my comprehension how it could possibly be argued that this would prevent the police from enforcing the law against terrorists in this country – it’s breathtaking,” he added.
“There is a real problem here and we need to tackle it.”
Naz Shah, the Labour MP for Bradford West, accused the government of “shutting down the everyday experiences of ordinary Muslims”.
“How dare he tell British Muslims that our experiences cannot define Islamophobia?” she asked of Mr Brokenshire.
“This government is not serious about the safety and security of British Muslims.”
In a letter to the prime minister, the head of the National Police Chiefs’ Council (NPCC) said the change could “undermine many elements of counterterrorism powers and policies”, including port stops, bans on terrorist groups and propaganda, and the legal duty requiring schools, councils and the NHS to report suspected extremism.
Assistant commissioner Neil Basu, the head of UK counterterror policing, said the definition was “simply too broad to be effective and it risks creating confusion, representing what some might see as legitimate criticism of the tenets of Islam – a religion – as a racist hate crime”.
“Despite the fact it would be non-legally binding, it would potentially allow those investigated by police and the security services for promoting extremism, hate and terrorism to legally challenge any investigation and potentially undermine many elements of counterterrorism powers and policies on the basis that they are ‘Islamophobic’,” he added. “That cannot be allowed to happen.”
Anna Soubry, co-chair of the APPG on British Muslims, questioned why the definition was “good enough for Ruth Davidson but not Theresa May”.
Writing for The Independent, she said: “We can only assume that our critics have either not read or misunderstood our report. We have been adamant in our defence of free speech and rigorous debate. The definition doesn’t exclude criticism or condemnation of all or any part of the faith of Islam, its teachings and interpretations.”
Mr Streeting said the APPG would continue to work with the government, Muslim representatives and other groups on a definition of Islamophobia.