Special report: How taxpayers' money was squandered in bid to halt Islamist terrorism (VIDEO)

On the eve of the fifth annniversary of the July 2005 bomb attacks, the Government's Preventing Violent Extremism programme has "tainted" good community cohesion work by associating it with counter-terrorism, say critics.

Some fearful Muslims now believe they are being "spied on" by councils and even their own organisations which have accepted Prevent money.

In a special report in Saturday's Yorkshire Post focusing on Beeston, Leeds, where three of the suicide bombers grew up, it is clear that residents have remained resilient and largely united in the past five years.

Some young people have emerged as talented and determined leaders and cite 7/7 as a turning point in their lives.

Around 200m of Government money has been spent on housing, schools, health and sports facilities in the deprived suburb and wider area, but some of the spending has unwittingly bred resentment and fuelled racist arguments in estates which have missed out on regeneration money.

The offer of cash from the Respect programme has also led to bitter arguments among Muslim community groups, with critics refusing to engage in the counter-terrorism scheme and others taking the money because other sources have dried up.

Civil liberties campaigners, politicians and a taxpayers pressure group are among the many critics of the Prevent programme.

Across Yorkshire's Muslim communities there are claims that they have been stigmatised and singled out for special treatment, while white, far Right extremism has been ignored by Prevent.

The coalition Government is now reviewing the Prevent spending amid calls for the community grants to be axed.

According to a report by the Taxpayers' Alliance, over 12m has been given out by local authorities - including in Leeds, Wakefield, Kirklees, Sheffield and Bradford - to community groups through Prevent projects.

Report author Matthew Sinclair said the grants should be abolished and the money spent on effective policing and targeted intelligence work to root out violent extremists.

Councils in Yorkshire who have taken Prevent funding - including Leeds, Bradford, Kirklees, Sheffield and Wakefield - say the money is funding useful work in the community, not just Muslim organisations.

The coalition government has concerns about Prevent.

A Government spokesman said: "The Communities and Local Government Select Committee has expressed grave concerns about the effectiveness of the programme, and its impact on Muslim communities - concerns shared by both partners in the coalition Government. We are looking closely at this programme as part of our review into departmental spending."

A longer version of this article, with two pages of backgroujnd stories, appears in Saturday's Yorkshire Post.