My father arrived in this country from India in January 1965, with a second-hand London A-Z stuffed in his jacket pocket and £3 in his wallet. A child of empire, he was born in Hyderabad in 1938 and came to Britain to study and work. His first few days in London were absorbed in news of Winston Churchill's death on 24 January; he was one of the more than 320,000 people who filed past the catafalque in Westminster Hall during the three days that the former prime minister's body lay in state.

It was not long before my father became a proud British citizen of Indian origin; he has since had two British children and a British grandchild. He arrived, however, in a country struggling to accommodate and integrate its burgeoning immigrant communities. Racial and cultural discrimination was rife; bedsits and hostels prominently displayed signs saying: "No dogs, no blacks, no Irish." My father had dog mess posted through his letter box.

The previous year, Peter Griffiths had been elected to parliament as Tory MP for Smethwick with the support of the infamous slogan "If you want a nigger for a neighbour, vote Labour". Three years later, Enoch Powell delivered his "Rivers of Blood" speech in Birmingham.

But in May 1966, 16 months after my father's arrival, the then home secretary, Roy Jenkins, gave perhaps the most significant speech of all on the subject of integration to the National Committee for Commonwealth Immigrants in London. Jenkins defined integration not as "a flattening process of assimilation but as equal opportunity, accompanied by cultural diversity, in an atmosphere of mutual tolerance". It was a turning point for relations between majority and minority communities.

Britain has come a long way from the nativist and assimilationist 1960s, from Enoch Powell and racist hoteliers. Opinion polls suggest this is a nation at relative ease with its racial, religious and cultural diversity in all walks of life.

Yet, in recent months, multiculturalism has come under sustained assault from our political and media elite prompted by a headline-grabbing intervention by the Prime Minister.

“Under the doctrine of state multiculturalism, we have encouraged different cultures to live separate lives, apart from each other and themainstream," Cameron said at a security conference in Munich on 5 February. "We have even tolerated these segregated communities behaving in ways that run counter to our values . . . Frankly, we need a lot less of the passive tolerance of recent years and much more active, muscular liberalism." But his deputy, Nick Clegg, took a different view in a speech in Luton on 3 March, in which he praised multiculturalism as "a means by which we can communicate with each other, seek to reach understanding of each other, share a similar set of values".

Over the past decade, public figures have queued up to deliver the last rites for multiculturalism, the condemnation cutting across party and ideological lines. In 2005 Trevor Phillips, then chairman of the Commission for Racial Equality (and now of the Equality and Human Rights Commission), warned that multicultural Britain was "sleepwalking to segregation". His analysis was shared by the Archbishop of York - Ugandan-born John Sentamu - and the Chief Rabbi, Jonathan Sacks, among others.

In January 2007, before he became prime minister, Gordon Brown similarly claimed that multiculturalism had "become an excuse for justifying separateness". He preferred to talk of "Britishness" and a "stronger sense of pat­riotic purpose".

One thing links these criticisms: they lack a settled and accepted definition of "multiculturalism". "The doctrine of state multiculturalism" has a certain ring to it, but what does it mean? The Prime Minister did not bother to elaborate. In truth, over the years, Cameron, Blair, Brown, Phillips and the rest have constructed a mythical version of multiculturalism - a "cardboard cut-out", to use Clegg's phrase - and held it responsible for a raft of sins, from segregation and separateness to extremism and terrorism.

“There is no definition in this debate," says the Labour MP Jon Cruddas, one of his party's more provocative thinkers on race and identity. "Its very elusiveness allows people to reinterpret the whole idea in a shrill and sour language." So, how would Cruddas define multiculturalism. "It's how we all learned to rub along together," he says. "Simple as that."

Out of many, one

For Tariq Modood, director of the Centre for the Study of Ethnicity and Citizenship at the University of Bristol, multiculturalism is "the political accommodation of difference". But it is also about "integrating new identities into the overarching, collective identity of being British". There is no contradiction between the two; nor does the need to accommodate and recognise difference outweigh the need for, or the importance of, a national identity.

As an academic, Modood is frustrated at the mischaracterisation of multicultural theory by both politicians and journalists. "The three key thinkers of multiculturalism are Will Kymlicka, Bhikhu Parekh and Charles Taylor," he says. "All of them emphasise the importance not just of difference but of common identities, common citizenship and the importance of dialogue across different communities."

“The term itself can be problematic," agrees Parekh, author of Rethinking Multiculturalism and political philosopher. He distinguishes between what he calls "multi-culturalism" and "multicultural-ism". The first sees "each culture as a world unto itself, a self-contained universe that cannot be criticised from the outside; there are no universal or intercultural norms and values". The second - which Parekh supports - sees "no culture as perfect; each captures one particular vision of human life and highlights one set of capacities. Such an approach sees each culture as valuable but also incomplete; it therefore needs to engage in dialogue with other cultures, to access those treasures that they possess, but it does not." Therefore, he argues, diversity on the latter model "enriches our society".

From a more sceptical standpoint, the Nobel Prize-winning economist and philosopher Amartya Sen has reached a similar conclusion. In his book Identity and Violence, published in 2006, he distinguishes between multiculturalism, which revolves around a tolerance of diversity and crucially allows for "cultural freedom" (including the freedom as an individual to move away from traditional ways of life), and what he calls "plural monoculturalism". The latter is characterised by "a diversity of cultures, which might pass one another like ships in the night . . . as if the distinct cultures must somehow remain in secluded boxes".

It is this deliberate distortion of multiculturalism that Sen finds so egregious - and that Cameron, like so many critics of multiculturalism, set up as his straw man in Munich.

“The vocal defence of multiculturalism that we frequently hear these days is very often nothing more than a plea for plural monoculturalism," writes Sen. "If a young girl in a conservative immigrant family wants to go out on a date with an English boy, that would certainly be a multicultural initiative. In contrast, the attempt by her guardians to stop her from doing this . . . is hardly a multicultural move, since it seeks to keep the cultures separate."

Separateness is at the heart of the recent critiques of multiculturalism. There is much talk of "cultural ghettos" in Britain and of "ethnic enclaves"; of "parallel lives" in "parallel communities". There is, however, little empirical evidence. Three of the country's most prominent social geographers, Ceri Peach at Oxford, Ludi Simpson at Manchester, and Danny Dorling at Sheffield, were quick in 2005 to question Phillips's claim that the nation was sleepwalking into segregation. Their research suggests that segregation is either stable or in decline.

Then there is "white flight" from the urban centres. If segregation is indeed on the rise, as those who criticise multiculturalism maintain, the trend whereby white families desert inner cities as local ethnic-minority populations increase is at least as much to blame as so-called self-ghettoisation. In Modood's words: "Ghettos are created by those who move out."

Above all else, it is disingenuous for Cameron and his media cheerleaders to pretend that they have instigated a much-needed debate about segregation when they have so little to say about the structural barriers to integration. Racial discrimination - in the job market, for instance - is seldom acknowledged; despite the wealth of evidence to the contrary, both conservative and liberal critics of multiculturalism bizarrely assume that Britain is a post-racial society. Yet the unemployment rate among Afro-Caribbean people in the UK has risen twice as fast as that of white people since the start of the economic downturn.

False logic

Socio-economic factors that block integration are also overlooked and ignored in the rush to denounce "voluntary apartheid". Patterns of ethnic segregation in housing are attributed not to decisions by postwar governments, nor to the consequences of urban decline, but to an imagined, undefined and unsubstantiated "doctrine of state multiculturalism". Yet separate or segregated communities are direct consequences of "public policy rather than cultural isolationism", says Cruddas, who has had to combat the myths around housing scarcity on his own patch in east London. Since 1980, half of the council housing stock in his borough of Barking and Dagenham has been sold off - but it is the Tory policy of "right to buy" that is to blame, rather than immigration or multiculturalism.

Cruddas sees the present anxiety over multiculturalism and diversity through the lens of growing economic insecurity. "Cameron is reframing 'state multiculturalism' as 'muscular liberalism' to swerve around the failure of the neoliberal economic settlement," he says. "He is capitalising on a sense of hopelessness and lack of belonging associated with the economic shakedown we're living through, and is reinterpreting it through a cultural rather than a material prism. Labour has to confront the problem through a more material approach to prevent people being distracted by culture wars."

Perhaps the most pernicious aspect of Cam­eron's speech was the way he associated multiculturalism not just with segregation and separateness, but with extremism and terrorism. To be fair, he wasn't the first to make the link. In August 2005, six weeks after the 7 July terrorist attacks in London, Le Monde published an essay entitled "The British Multicultural Model in Crisis". That same month, the French scholar of Islamism Gilles Kepel claimed that the London bombers "were the children of Britain's own multicultural society". Their attack, he said, had "smashed" the "consensus" behind multiculturalism in Britain "to smithereens".

It also exacerbated the (Labour) government's tendency to view British Muslim communities exclusively through the prism of security and counterterrorism. Problems of integration and community cohesion became wrapped up in the discourse of the "war on terror".

It was a poor strategy. For a start, by any conventional criteria, the London bombers were integrated - their ringleader, Mohammad Sid­ique Khan, was a well-known and well-liked teaching assistant who eschewed an arranged marriage; Shehzad Tanweer, who detonated the Aldgate bomb, was an outstanding sportsman who had studied sports science in Leeds, and worked part-time at his father's fish-and-chip shop in the city. All four bombers spoke fluent English.

There is, too, the observable fact that extremism is not confined to multicultural societies such as Britain; how else can we explain the terrorist violence in monocultural Saudi Arabia?

“Multiculturalism used to be bound up with immigration. It was a cover for talking about immigrants," Parekh says. "In the past ten years, it's become a code word for anxieties about Muslims and terrorism."

Much of the anxiety about the alleged lack of Muslim integration in Britain is misplaced and misinformed; it tends to be driven by alarmist and often Islamophobic press coverage. Contrary to popular opinion, most Muslims in this country are patriotic, loyal and integrated, by most definitions of these contested terms. According to a Gallup poll published in May 2009, British Muslims are more likely than non-Muslim Britons to say they identify strongly with the United Kingdom (77 per cent for the former, compared to 50 per cent for the latter). British Muslims are also more likely than non-Muslim Britons to want to live in mixed areas, among people of different backgrounds (67 per cent, against 58 per cent).

Perhaps the Prime Minister should spend less time abroad denouncing multiculturalism and more time at home working to combat prejudice. He could use his bully pulpit to help foster greater tolerance as well as equality of opportunity. Integration, as even he wrote in an Observer article in 2007, is a "two-way street". Or, as Modood put it to me: "It's about ensuring that the burdens of managing difference should be shared by minorities and majorities alike."

Granted, in some cases multiculturalism has been exploited by self-appointed leaders of minority groups to claim special privileges or exemptions from the law. But it isn't to blame for a perceived lack of national identity or common purpose; nor is it the cause of supposed segregation, let alone extremism. On the contrary, by recognising, respecting and accommodating difference, multiculturalism helps communities come together. Supporters would argue that it is the only viable basis for shared citizenship in a culturally diverse society.

This is 2011, not 1965 - the year in which my father arrived in London. In this age of globalisation and devolution, Britain cannot return to some fantasy of a halcyon monocultural past. In the 21st century, identity isn't finite; loyalties do not have to compete. Those of us who are comfortable with our multiple, non-competing identities remain bewildered by the confrontational tone of Cameron et al.

Minority communities must have the freedom to nurture and celebrate their racial, religious and cultural heritage within the law and, as Roy Jenkins put it, "in an atmosphere of mutual tolerance". The truth is that a truly liberal society isn't muscular, it's multicultural.

Mehdi Hasan is senior editor (politics) of the New Statesman