It's late afternoon on Bethnal Green Road, in east London, and I am rushing from the tube for a meeting. Suddenly, out of the corner of my eye I catch something that brings me to a stop: a rainbow flag turned into a no entry sign, with the words "gay free zone" written across. Above are the words "Arise and warn" and below "And fear Allah. Verily Allah is severe in punishment". Both with a Koranic reference. I shiver, and am reminded of the words "Juden raus" (Jews out) that my mother would have seen in Berlin in the 1930s. It is not something I thought I would ever witness 70 years on in one of the most diverse neighbourhoods in Britain, where gay pubs share the same streets as synagogues and Halal butchers.

The previous December, at a meeting of Rainbow Hamlets – the Tower Hamlets lesbian, gay, bisexual and transgender (LGBT) forum, which I co-chair with Rebecca Shaw, the police had told us about two reported anti-gay sticker sightings in the borough. They linked them to a sighting in neighbouring Hackney, one across the capital in Twickenham, and another in Nottingham.

Between 11 February and the end of March, more than 65 similar stickers were displayed around London, with over 50 in Tower Hamlets. This was turning out to be the most intense homophobic hate literature campaign since the 1980s battle over section 28.

Coverage of the sticker campaign, particularly online, often seemed ill-informed. Comment pieces from both sides tended towards a rabble-rousing tone, inspiring a torrent of racist and Islamaphobic abuse. I experienced more back-to-my-roots shivers, this time thinking about my grandparents' fight against Oswald Mosley's blackshirts.

Acting on Rainbow Hamlets's advice, a joint statement was issued by Tower Hamlets' mayor Lutfur Rahman, the Inter-faith Forum, and the East London Mosque & London Muslim Centre (ELM). This represented the first public condemnation of homophobia by both Rahman and the ELM.

The local authority, Tower Hamlets Homes (the largest social housing provider in the borough), and the Metropolitan police also issued directives to ensure that within a further 48 hours hundreds of public servants were on the lookout to report the stickers and remove them.

A series of specially convened meetings at the town hall drew representatives from council departments, education, housing, the police and community organisations. At these meetings, the sticker campaign, homophobic hate preachers, racism among some members of the LGBT community and the infiltration by the far right of East End Gay Pride were placed firmly on the agenda, each with equal vigour. And here, the ELM first admitted there had been homophobic incidents in the mosque in the past and that it had adopted new policies and procedures to ensure it would not happen again.

Add in regular community consultation and the police operation, and these joint actions represented a rapid and timely response to events.

At informal meetings involving the Council of Mosques, the ELM, and the Inter-faith Forum, chaired by a Christian minister, we looked at how to address homophobia in faith communities. We argued that no hatred, harassment or bullying of any LGBT person is ever justified by faith, even when scripture forbids same-gender sexual relations. Whatever any community's teaching, this is entirely separate from its duty to respect human life and to develop good relations with its neighbours and other communities of culture and belief.

Out of these meetings came the idea for a major interfaith conference on the International Day Against Homophobia on 17 May. A multifaith LGBT steering group was assembled and Rahman and the cohesion minister, Andrew Stunell, agreed to join more than 80 LGBT and straight people from Christian, Jewish, Muslim, Sikh, Hindu, Buddhist and secular backgrounds.

But in April, it suddenly became hard to get a response from the Council of Mosques and the ELM. We realised that neither would talk publicly about their new stance on hate speech, or even, despite our strenuous efforts, send any formal representatives to the conference. A couple of community members were sent along to participate in their own right, but a chance was missed, goodwill dissipated and the trust that had been built up sorely tested.

All too often, these issues are dealt with in ways that create enormous tensions and hurt, reinforce ignorance and disrespect, and build anger and hatred. At the same time, whatever good words are said to us in meetings in private, they are only of value if they lead to public action. Otherwise, what use are they in building understanding between communities when tensions exist?

Meanwhile, it soon became clear that the law does not deal with anti-gay hate material in the same way as it does racist, antisemitic or anti-faith literature.

The relevant Public Order Act section depends on whether the material displayed is: threatening, abusive or insulting (section 5); whether there was also an intent to cause harassment, alarm or distress (section 4a); and if the conduct or material is threatening and is intended to stir up hatred (section 29).

If the offending material is racist, antisemitic or anti-faith, there is a special aggravated status given to the section 4a offence which means it becomes a serious criminal charge that can be dealt with in the crown court, with more extensive powers of sentencing and greater police powers of investigation. This does not apply to homophobic hate material.

Whereas the case law for racist and antisemitic material is well established, many of the provisions relating to homophobia only came into effect last year. There is no case law directing police or the Crown Prosecution Service towards the appropriate charging level or identifying what constitutes threatening homophobic material.

Neither Metropolitan police nor British Transport police (BTP) investigating officers would accept that the stickers were threatening. The BTP, which had CCTV footage, charged Mohammed Hasnath under section 5. He was convicted last month after admitting to displaying and disseminating the stickers to others, but not to intending to cause distress. Hasnath claimed he was merely promoting his faith. However, District Judge Jeremy Coleman said when passing sentence: "I think you used these stickers deliberately to offend and distress people, you certainly succeeded in doing that. You have upset people and they deserve an apology, you are not entitled to behave in this way." Hasnath received a £100 fine.

In June, we obtained a month-by-month analysis of homophobic crime figures in the borough. It reveals that incidents in Tower Hamlets have risen by a third (33%) between April 2009-March 2010 and April 2010-March 2011, much more than the 21% widely reported in the media. The increase is of even more concern because the data counted all the reports of stickers in the borough as one linked incident.

The ELM is a leader of the Muslim community, with a responsibility to set an example. It has accepted it has hosted at least one homophobic speaker, Abdul Karim Hattin, in 2007, whose Spot the Fag lecture was featured on Channel 4's Dispatches programme. Last month, the ELM contacted Rainbow Hamlets after accusations of culpability for the rise in homophobic crime in Tower Hamlets appeared in the national press. It asked what could be done.

We are now engaged in intense dialogue. Our approach is to treat the ELM like any other body in which homophobia has occurred. So we have made clear that we intend to compile an evidenced-based report. We have asked the ELM for a clear statement of its policy towards homophobic speakers. On its website it does say "those hate preachers who circumvented our bookings policy in the past are now barred; our vetting procedures for speakers and guests appearing at our mosque and centre have been significantly tightened over the past year". But to date no one has seen its policy. We have also asked how it will enforce the policy and, crucially, for a clear response about which preachers are barred. We intend to report progress next month.

Today, moderate communities have a simple unequivocal duty: to be seen to show all their neighbours respect – whether or not they agree or approve of their beliefs or lifestyle. What is needed is a paradigm shift among LGBT and Muslim opinion formers, one that enables the leaders to find a rhetoric that can speak of respect and joint-working publicly, and which addresses patterns of prejudice on all sides without fear.

Twenty years ago this month, I was secretary of the Jewish Lesbian and Gay Helpline when it was banned from a cross-community charity walk organised by the chief rabbi, Lord Sacks, because it was an event for families. Clerics, like all of us, can change. Nowadays, Sacks says: "Jews cannot fight antisemitism alone, Muslims cannot fight Islamaphobia alone, gays cannot fight homophobia alone. The victim cannot cure the crime, the hated cannot cure the hater. We are as big or as small as the space we make for others who are not like us."

We should all take note.