Muslim leaders have hit out at NZ First leader Winston Peters for claiming New Zealand has a "militant underbelly" of Islamic extremists with the potential for London-style suicide bombings.

In a speech to Far North Grey Power, Mr Peters raised the spectre of Islamic terrorism and revealed he had written to Muslim leaders asking them to report "radicals, troublemakers and potential dangers" to police.

But the president of the Federation of Islamic Associations, Javed Khan, said Mr Peters had no evidence to back up his suggestion the community was harbouring extremists.

"It is very offensive. I think the Muslim community will be outraged by what he has said. This is the usual Winston Peters brand of politicking. Previously, he has used the immigration card. This time he’s using Muslims as his election card."

Labour MP Ashraf Choudhary, New Zealand’s first Muslim MP, also accused Mr Peters of a "political sideshow".

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