Britain’s largest Muslim group has warned that big cuts to the police planned by the Conservative government risks damaging the fight against terrorism.

The Muslim Council of Britain has previously been critical of police actions and has been branded by some as supporting extremism, which it strongly denies. But it called on Sunday for the police service to be spared a swingeing cut to its budget, fearing it would lead to reductions in neighbourhood officers. The MCB says these officers are crucial to building trust within communities which can lead to intelligence that helps catch those planning terrorist violence.

After the Paris atrocity that left 130 people dead, George Osborne is under pressure to reduce the government’s planned cut to the policing budget when he announces on Wednesday how much money each government department will get.

The MCB is an umbrella group representing 500 Muslim organisations across Britain, including mosques, schools and charities. Miqdaad Versi, security and counter-terrorism spokesperson for the MCB, said: “Cuts in policing budgets have affected the opportunity for community organisations to build links and relationships with the police as officer numbers have been drastically reduced. It is difficult to see how new cuts will not make this situation worse.”

The MCB fears officers that communities see every day will disappear, being replaced by counter-terrorism specialists who parachute in and have no relationship with the people they are trying to get to trust them.

Versi said: “To develop a more effective policy in combatting terrorism that continues to blight our society, it is key for the police to engage, consult and build trust with communities as partners.”

Osborne has been locked in a battle with Theresa May’s Home Office – which funds the police – over the scale of the cuts. A series of former and current police leaders have warned that public safety, especially at a time of heightened terrorist threat, could be endangered.

The MCB’s intervention, essentially in favour of the police community efforts, is all the more surprising as the Conservative government declines to engage with the organisation, claiming it is not moderate enough.

Chief constables are planning for a minimum 25% reduction in the money they receive, triggering fears officer numbers may fall to their lowest level since the 1970s. The West Midlands force has warned it would have to drastically scale back its neighbourhood policing, and its area including Birmingham, which has the highest proportion of Muslims of any force.

Versi added: “Our view, supported by experts who have gone through similar concerns in Northern Ireland, is that it is important that there is sufficient police to ensure community engagement is from local officers, and not from counter-terrorism or special branch officers, given the importance that communities feel able to engage with the police.”

The MCB remains critical of the Prevent programme, which aims to counter radicalisation. The government says it will protect budgets for officers involved directly in counter-terrorism work. But police chiefs, and now the MCB, say the flow of intelligence from communities, gained by having community based officers whom people get to know and trust, is also vital.

“We have been told by some of our affiliates that when they tried to engage with police on community events, they have had calls from counter-terrorism and Prevent officers, who now take the lead in community engagement,” Versi said.In some cases, this has caused concern and a decreased willingness to engage with the police.”

On Thursday, a leaked letter from an unnamed police chief emerged warning big cuts would damage police efforts to stop violent extremists. It was written by Mark Rowley, the police national lead on countering the terrorist threat. In the letter Rowley, assistant commissioner at Scotland Yard’s counter-terrorism command, said regular officers were vital to gain intelligence from communities.

Versi said: “The 20% reduction in policing budgets in the UK in 2010 has significantly reduced Neighbourhood policing teams, resulting in wards now sharing resources and personnel.”

On Sunday, Osborne refused to say the spending on frontline police could be protected but claimed the spending review would show a 30% increase in the overall counter-terror budget.

Asked during a BBC interview if frontline police were going to be protected, he replied: “There had been difficult decisions.”

He said all government departments had now agreed spending plans and cuts. The Home Office was one of the last to settle, but the biggest row between it and the Treasury being police spending.