Reflecting the government's decision to abandon the "aggressive rhetoric" of the so-called war on terror, the guide tells civil servants not to use terms such as Islamist extremism or jihadi-fundamentalist but instead to refer to violent extremism and criminal murderers or thugs to avoid any implication that there is an explicit link between Islam and terrorism.

It warns those engaged in counter-terrorist work that talk of a struggle for values or a battle of ideas is often heard as a "confrontation/clash between civilisations/cultures". Instead it suggests that talking about the idea of shared values works much more effectively.

The guide, which has been passed to the Guardian, is produced by a Home Office research, information and communications unit which was set up last summer to counter al-Qaida propaganda and win hearts and minds.

It shows that the government is adopting a new sophistication in its approach to counter-terrorism, based on the realisation that it must "avoid implying that specific communities are to blame" if it is to enable communities to challenge the ideas of violent extremists robustly. The new lexicon of terror surfaced briefly last month when the home secretary, Jacqui Smith, made a speech on counter-terrorism declaring violent extremism to be "anti-Islamic".

But the internal Home Office guide shows just how far a new official language, to use when talking about terrorism, is being developed. "This is not intended as a definitive list of what not to say but rather to highlight terms which risk being misunderstood and therefore prevent the effective reception of the message," says the Home Office paper. "This is not about political correctness, but effectiveness - evidence shows that people stop listening if they think you are attacking them."

While the leaked Whitehall papers show a new sophistication in the government's approach to talking about terrorism they reveal that their profiling of those most likely to prove vulnerable to violent extremism remains very vague.

They also reveal the crude criteria under which the communities secretary, Hazel Blears, is distributing £45m over the next three years for local communities to build resilience to violent extremism.

In the first year the funds will only be distributed to areas with a Muslim population of more than 4,000 based on 2001 census data. "This data is now 6-7 years old and given high population growth in Muslim communities is likely to be fairly out-of-date," says the internal Whitehall correspondence adding that each qualifying local authority will receive a fixed minimum allocation with increments dependent on the size of its Muslim population.

The limitations of this crude population approach suggest there is only a very limited official understanding of the geography of violent extremism in Britain.

Officials admit this approach will mean that six areas currently funded for tackling violent extremism will not meet the criteria from April. That would include, for example, Crawley which was home to three of the five men convicted over the Operation Crevice plot to bomb the Bluewater shopping centre, in Kent, and the Ministry of Sound nightclub in London.

A separate joint Home Office/ Communities Department paper on the strategy to prevent people becoming or supporting violent extremists suggests a disturbingly vague description of those being targeted: "There is no single profile of those most susceptible to these factors but they are likely to be young (generally younger than 30) and male (although the number of women who support and participate in violent extremism is increasing)."

The same paper stresses that "grievances which ideologues are exploiting" to make new recruits should be addressed where they are legitimately based.

It says: "No perceived grievance can justify terrorism. But where concerns are legitimately expressed then we must be prepared to debate them.

"We are committed to better explaining existing policies, such as the UK's foreign policy, refuting claims made about them in the language of violent extremists."

But it adds that where concerns are "legitimately based we must be prepared to address them."

However, it makes clear that this does not mean changes in British foreign policy but using existing programmes to tackle inequalities and unemployment of the Muslim community in Britain.

The "global opportunities fund" and overseas aid programmes would be used to "help address the real grievances of people in key countries overseas which can increase their susceptibility to the extremists' message".