Theresa May’s planned laws for countering extremism and terrorism are close to being shelved because the proposed legislation has failed to provide a clear definition of the problem it is intended to address.

Sources say that the former home secretary’s delayed counter-extremism bill, rebranded the counter-extremism and safeguarding bill in the Queen’s speech last May, has been in effect grounded by government lawyers after failing to provide a legally acceptable definition of extremism.

The bill details proposed civil orders to tackle extremism, which is defined only as “the vocal or active opposition to our fundamental values, including democracy, the rule of law, individual liberty and the mutual respect and tolerance of different faiths and beliefs”.

The government’s legal advice is that the planned legislation cannot adequately define its core issues of “nonviolent extremism” and “British values”; instead it risks bringing law-abiding people under unnecessary scrutiny.

A source close to the process said: “The bill is sinking without trace. They cannot get a working definition of extremism – lawyers are effectively saying it’s incompatible with issues like free speech.”

The failure is a personal one for May, whose intention as former home secretary to strengthen the state weaponry against extremism was first mentioned in the Queen’s speech of 2015, although it neglected to define the extremist activity that it proposed to suppress.

Liberty’s Bella Sankey said that, rather than making us safer, the bill would ‘curb our freedom’. Photograph: liberty-human-rights.org.uk/Handout

May’s intention to broaden extremism’s definition was always contentious, with opponents arguing it would diminish the law’s protection of fundamental rights including freedom of speech, freedom of religion and freedom to protest. Critics have said that it would discriminate against Muslim communities or could be used against groups that espouse conservative religious views including evangelical Christians and Orthodox Jews who do not encourage violence.

Bella Sankey, policy director for human rights group Liberty, said: “We and countless others warned the government that these plans to shut down free and democratic speech were unworkable, fundamentally dangerous and doomed to failure. We’re glad they’ve finally seen the light.

“We already have a wealth of laws to fight incitement to violence. Rather than making us safer, the counter-extremism bill would alienate, discriminate and divide our communities, all while curbing our freedom – a core British value that’s fundamental to our democracy and to the fight against those who want to destroy it.”

A damning report by a cross-party group of MPs and peers, the joint committee on human rights, warned the government last July that creating a definition of extremism might prove legally insurmountable.

Observing that government departments used different wording to describe extremism, MPs concluded that “these definitions are couched in such general terms that they are likely to prove unworkable as a legislative definition. In particular, the extent to which lack of ‘mutual respect and tolerance of different faiths and beliefs’ could or should be deemed unlawful is likely to prove deeply contentious.”

It added: “It is far from clear that there is an accepted definition of what constitutes extremism, let alone what legal powers there should be, if any, to combat it.”

In its report, the committee reveals that it wrote to May in October 2015 when she was home secretary, asking how she intended to define “non-violent extremism” and “British values”.

The committee, says the report, did not receive a substantive or satisfactory response to the question. The Home Office also did not respond to the Observer after being asked if a definition of extremism had been agreed, although a spokesperson said the bill remained under consideration.

The government’s response to the criticisms from the joint committee of human rights, published last October, said: “We accept that there needs to be certainty in the law. Legislation would not be discriminatory or targeted at a particular section of the public. It would apply to all citizens and be targeted at harmful activities rather than the holding of views. Freedom of worship is a fundamental and hard-fought British liberty that should be defended.”