Rebecca Long-Bailey has vowed to make it Labour policy to scrap the anti-extremism programme Prevent if she is elected to replace Jeremy Corbyn as party leader.

The shadow business secretary said she wanted to ban the scheme and then conduct a review aimed at setting up a new government-funded system that involves Muslim leaders, in an effort to stop the “alienation” of Britain’s Muslim communities.

Her suggestion goes significantly further than the 2019 Labour manifesto, which stated the party wanted to review Prevent.

Long-Bailey held a roundtable event with Muslim community leaders at al-Manaar mosque in Kensington, London, on Tuesday. Labour members will be balloted in the party leadership contest from Friday.

“The government’s counter-terror strategy is clearly failing,” Long-Bailey said. “The Prevent programme has alienated the Muslim community, set back our freedoms and not made us safer. The evidence is clear: it’s got to go.”

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A new system would involve the Muslim Council of Britain, the Muslim Leadership Foundation, charities, the police, social services and youth service providers, she said.

Muslim organisations have long felt that they have not been engaged with by the authorities in developing the Prevent strategy. The programme, founded by the Labour government in 2003, had its remit expanded significantly in 2011 under the coalition government, which claimed it had up to that point failed to stop extremist ideologies from flourishing in Britain.

From 2015 a statutory duty was introduced in schools, NHS trusts, prisons and local authorities to report anyone deemed at risk of being radicalised to the police. These individuals are then assessed with the possibility of being referred to the de-radicalisation programme Channel.

Between 2017 and 2018, 7,318 individuals were subject to a referral and 394 cases were escalated to the Channel process.

Prevent has been widely criticised by religious groups and the National Union of Teachers over what they see as the potential for it to target Muslim students. A UN special rapporteur said in 2016 it was “dividing, stigmatising and alienating segments of the population.”

Harun Khan, the secretary general of the Muslim Council of Britain, said Muslims were left feeling spied on.

Long-Bailey said: “We would be better served by a new cross-service approach, working in partnership with affected communities. This new approach would build trust [and] protect those vulnerable to recruitment propaganda, alongside proper funding for local services like youth clubs.”

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She believes that as well as unfairly discriminating against Muslims, the current system muddies the waters around civil society protest groups and violent extremism. “The recent listing of climate, anti-war and Palestine solidarity groups as ‘extreme’ by the police shows just how far this programme has over-reached.Attacking the democratic right to protest and dissent does nothing to keep people safe from those fanatics that would do us harm,” she said.

The government was forced to clarify this year that Extinction Rebellion was not being considered as an extremist group. Counter-terrorism police in south-east England had listed the group as having an “extreme ideology” and said young people under its influence may be at risk of committing acts of violence. The document has since been recalled.

Prevent is due to be reviewed but the government has so far failed to appoint an independent reviewer after Lord Carlile QC was stood down in December. There had been objections over his previous strong support for the programme.

Long-Bailey’s Labour leadership rival Keir Starmer won the backing of the former Momentum national coordinator Laura Parker on Wednesday as the campaign reached its seventh week. Momentum is backing and actively campaigning for Long-Bailey.

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Parker, an influential leftwing activist who fronted the group during the general election, said Starmer was the person to unite the party and take its membership from 580,000 to 1 million.

She said: “[He has] made an unequivocal commitment to preserving our core policies. In defending the transformative economic agenda upon which he stood as a shadow cabinet member in 2019, I trust that Keir means what he has written in his 10 pledges to us.

“It would be self-defeating for him to say one thing then act otherwise. One of the lessons we all – leadership candidates, MPs and members – have just learned the hardest way is that a perceived lack of authenticity is fatal. I am confident that under his leadership, we can build an enduring coalition.”