In recent months, Luton and Birmingham have seen many instances of street violence between anti-fascist demonstrators and far right organisations, Sky News reports.
Ninety people were arrested in Birmingham after clashes between the far-right English Defence League (EDL) and counter-demonstrators near the city centre last weekend.
Campaigners have accused the Government of inflaming passions on both sides by constantly using phrases such as "bogus asylum seekers" and "bogus refugees".
"Home Secretary David Blunkett and his colleagues have been posturing over their tough stance on immigration, fuelling the far-right and further alienating minority communities across the country," Arun Kundnani, of the Institute of Race Relations, said.
Kundnani added that Labour in particular had been guilty of adopting British National Party rhetoric as it attempted to win back voters - using phrases such as "British jobs for British workers".
"There has been a progressive increase in far-right politics over the past eight years," Sky News quoted him, as saying.
"In pretty much every election in that period the BNP have increased their support, culminating in the election of their MEPs, and we've seen the emergence of groups like the EDL, which are more focused on street violence."
He warned that irresponsible campaigning on issues such as immigration, Muslim life in Britain and national identity could trigger violence.
A Labour Party spokesman, however, dismissed his concerns, saying: "It is the responsibility of all mainstream parties to defeat the BNP and their disgusting policies.
"At the next election the Labour Party will campaign on the issues that matter to real people and our policies to build a fair future for all." (ANI)