Britain was too late in recognising the need to tackle the extremist views that fuel terrorism, the Foreign Secretary has suggested.
Philip Hammond said countering Islamist extremism is the "great challenge of our time" and warned the international community they must face the problem.
Past multiculturalism policies created intolerance of difference, and there has previously been too much anxiety about causing offence instead of "standing up for what is right", he told a security summit.
In a speech in Manama, Bahrain, Mr Hammond said: "We in Britain, have recognised - perhaps later than we should have - that to prevail in that struggle, we have to tackle all forms of extremism, not just violent extremism."
"In the UK, we've been too reluctant in the past to recognise the link between non-violent extremism and violent extremism," he added.
"For decades we have clung to a false distinction between the two. We have tolerated - in fact we've even celebrated in the name of multiculturalism - ideas, behaviours and institutions that have encouraged separateness of identity and intolerance of difference.
"With hindsight, we've been too tolerant of intolerance. Too anxious about causing offence instead of standing up for what is right and tackling head-on the radicalisers and the extremists peddling their messages of hatred and division."
Plans for a permanent UK military base in Bahrain as part of wider proposals for an increased presence in the region were discussed at the summit last year, and Mr Hammond said details about Britain's Gulf strategy, which will set out a more sustained presence "on land, at sea and in the air", will be published in the next few months.
David Cameron vowed to ''aggressively'' pursue and disrupt extremists trying to spread the ''poisonous ideology'' of radical Islamism when he unveiled the Government's counter-extremism strategy, and has warned against ''passive tolerance'' of extremist views.
But campaigners warn the plans will curb free speech and could fuel terrorism.
Mr Hammond dismissed the concerns, telling the summit: "Of course, we must respect different cultures, traditions and histories.
"But we also have to be clear that the failure to allow space for difference - or even dissent - can create a breeding ground where extremism and its bedfellow, terrorism, can quickly take root."
Mr Hammond said there was a international battle for the "hearts and minds" of young Muslims, and the Government "will be making the case at every opportunity that it is possible to be a good Muslim and a good British citizen".