The Muslim Council of Britain accused the Conservative leadership of "denial, deflection and discounting" after the party announced it would be holding a broader investigation into "all types of prejudice".
Chancellor Sajid Javid - who forced his fellow candidates in the Conservative leadership campaign to sign up to a probe on anti-Muslim abuse in the party - confirmed the u-turn on Sunday, saying it "made sense" to launch a wider inquiry.
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"Yes there will be an inquiry into anti-Muslim hatred, absolutely... And it will start this year," he told the BBC's Andrew Marr.
He added: "We will have an inquiry into prejudice and it will absolutely mean looking into anti-Muslim hatred and making sure that our zero tolerance, absolute zero tolerance is as effective as it can be, looking to see what other procedures we could have in place.
"But at the same time it also makes sense to look at any other kind of prejudice. It makes absolute sense to look at all types of prejudice in any form because it is all unacceptable."
But Harun Khan, secretary general of the Muslim Council of Britain lashed out at the decision, saying voters would be "sceptical" of the party's commitment to stamping out Islamophobia.
"The Prime Minister has once again broken his promise to hold an independent inquiry into Islamophobia in the Conservative Party," he said.
"The problem is institutional and endemic at all levels of the Party, yet there has been denial, deflection and discounting of the issue at every turn. It is important for all parties to genuinely commit to an inclusive culture in Westminster."
He added: "Unfortunately many British Muslims, some of whom will want to vote Tory, will remain sceptical of claims of an anti-racist Conservative Party when its leadership refuses to genuinely tackle anti-Muslim racism in its ranks."
The comments come after former Conservative Party co-chair Baroness Warsi accused Health Secretary Matt Hancock of "whitesplaining" the party's approach to tackling Islamophobia, after he said others took a "more balanced approach" to the problem than the Muslim peer.
Baroness Warsi, who has been an outspoken critic of the party's handling of cases of Islamophobia after a swathe of councillors and members were suspended for making anti-Muslim remarks, said the decision to broaden the investigation was "predictable" but "disappointing".
The Conservative Party have been approached for comment.