An investigation by a leading think-tank found extremist literature at six libraries, three in the London area, two in the Midlands and one in the North.
It raises fears that public libraries could inadvertently fuel the radicalisation of young Muslims.
The recent case of Dhiren Barot, who was jailed for 30 years for plotting a series of atrocities, showed that terrorists have used university libraries for research.
Patrick Mercer, the Conservative MP for Newark and the Government’s new adviser on security issues, said: “I don’t oppose free speech but the amount of this material is frightening.
“It has been bought with taxpayers’ money and you have got to question the balance here.
“Much of the material has very extreme views and I wouldn’t want an impressionable young person to come across it and think that these are the views of the majority of Muslims.”
“Many of these books stocked in the Islam section of libraries glorify acts of terrorism against followers of other religions, incite violence against anyone who rejects jihadist ideologies and endorse violence and discrimination against women,” the report says.
“In a number of cases these books are not only on library shelves but are also given special prominence in displays.
“In the worst cases they are the tools of radicalisation and increase the risk of Islamic terrorism.”
Tower Hamlets, one of the most heavily populated Muslim areas in the country, has eight libraries stocking dozens of books in English, Urdu, Bengali and Somali – including works by Hamza and al-Faisal.
Both were jailed for incitement to murder and their writings were found in the council flat used as a bomb factory by the failed July 21 suicide bombers.
Al-Faisal also influenced at least one of the July 7 bombers and was deported this year after finishing his seven-year sentence.
In a book entitled Natural Instincts, he writes: “The kafirs [non-believers] are the henchmen of the Shaitaan [devil]” adding later: “The only language the kafirs respect is jihad [holy war].”
Other authors on the shelves include Hassan al-Banna, the founder of the radical Muslim Brotherhood, and Sayyid Qutb, a major influence on Osama bin Laden.
Tower Hamlets has a total of 40 books by the two men which include calls for a revival of the principles of jihad.
The borough also has hundreds of books associated with Jamaat-e-Islami, the Pakistani Islamic political party founded by Abu Ala Maududi, who has called for a “universal revolution”.
The report also found that libraries in Leicester had 10 copies of books by Maududi and Ealing had 10 by Qutb.
The radical Islamic political party Hizb ut-Tahrir is also represented in Tower Hamlets, with one book, Funds in the Khilafah State, claiming: “The mere apostasy of the apostate gives Muslims the right to shed his blood and seize his property.”
Other books advocate polygamy, forbid the “free mixing of men and women” and one, Women Who Deserve To Go To Hell says: “We have no intention to accuse women when we say that they will be in a majority in hell.”
There are also dozens of books by moderate Islamic scholars but the report says that there are “excessively large collections of certain Islamic texts designed to incite hatred and violence”.
Tower Hamlets Council said yesterday that it would review its policy on Islamic literature.
Birmingham and Ealing councils said they were happy to stock any material that was legal while Steve Rigby of Blackburn council said: “Librarians do not act as censors where titles are freely available.”
Inayat Bunglawala, a spokesman for the Muslim Council of Britain and a Government adviser, said: “These are authors who are widely read in the Muslim world and it is not surprising that they are stocked in areas where there happens to be the highest concentration of Muslims,” he said.
“It does not necessarily mean you agree with them, it is part of a free society.”
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