Far-right movements like the English Defence League (EDL) have the potential to inspire individuals to break off and join more extreme groups, a minister warned.
Delivering a speech at a conference on far-right extremism, security minister James Brokenshire said that the rise of movements such as the EDL was a "worrying phenomenon".
He warned that the EDL and others have the potential to "stoke radicalisation" and could ultimately cross the line into an area that concerns counter-terrorism strategy.
The minister also revealed that more than 2,000 websites had been shut down since 2010 for breaching UK terror laws by the Counter-terrorism Internet Referral Unit.
Mr Brokenshire hit out at groups such as the EDL for "inflaming tensions and spreading hate-filled prejudice within communities".
He said: "The narratives groups such as the EDL use as their capital - engendering fear and distrust about large sections of our communities - have the potential to stoke radicalisation.
"There are a growing number of examples which suggest extremist and terrorist groups can potentially destabilise each other - the presence of one causing a spiralling effect on the other - and offering an enemy against which to define themselves.
"There are also views that groups such as defence leagues can provide 'gateway ideologies' through which individuals may migrate to more extreme organisations. Where these lines blur, from a counter-terrorism perspective, is where the real risk, and our interests, lie."
His speech came as a King's College London report claimed the EDL was exploiting concerns surrounding sex-grooming gangs to fuel its anti-Islam agenda.
The far-right group is using recent cases, such as the nine Asian men jailed last year for grooming girls in Rochdale, to build support, King's College London found. And it is building a far-right network with countries across Europe, according to the university's International Centre for the Study of Radicalisation.