Muslim student leaders have warned further education minister Bill Rammell that their members live in fear of a backlash after the London suicide bombings.
Mr Rammell has responded by calling for a two-way deal between students and government in the aftermath of the atrocities of July 7 in which 56 people died, including the four terrorists.
He stressed that a "balance" will have to be struck between freedom of speech and "responsibilities" in colleges and universities, adding that "extremists have to be tackled and challenged".
The students' concerns were raised in a private meeting in Leeds last week.
Businessmen were also among the select group asked to meet the minister.
The Leeds area - home of three of the four suicide bombers - became a focus of police activity in the aftermath of the raids but Muslim leaders are concerned that a backlash in colleges could affect Muslim students anywhere in the country.
Mr Rammell met Alkhansa Alhadithi, general secretary of the Federation of Student Islamic Societies, at the city's Park Lane college, where he had visited a new sixth-form centre earlier in the day.
Two out of three Muslim students in Britain believe the Iraq war contributed to the London bombings, according to a survey by the federation.
Ms Alhadithi said the fears of Muslim students are heightened as they return to college for the first time since the London bombings after the summer holiday.
After the meeting, she said that Muslim students have "nowhere to hide" because "the girls wear headscarves and the men have their beards trimmed in a certain way".
"The minister wanted to hear our concerns following 77 and other events in London and said he wanted to come to an agreement to help solve the problems," she said. "He told us he wanted to meet people from Muslim communities to hear their concerns.
"I came to discuss the fears Muslim students are feeling because they are going back to colleges where there will be extra monitoring of them on campuses.
"We are also worried about there being some sort of backlash against us because of what happened from our student colleagues.
"But I think it was a fruitful meeting. The minister has understood the problems that Muslims face and has been very positive about our concerns and taken them on board. This is a step forward because the Government needs to understand we do feel isolated and feel there are limits as to how far we can integrate."
Mr Rammell said the fact that the meeting took place in Leeds was a "total coincidence", despite its connections with the recent terrorism. He is holding similar meetings around the country.
Colleges are to be urged to report any incidents involving aggression against Muslim students and to take action where necessary. Islamic students will be advised to note any racial remarks or acts of intimidation against them.
Mr Rammell said: "This meeting was a step forward. The Government has to further engage Muslims to try and solve the problems. Engaging with the Muslim communities is the way forward.
"This is very much carrying on part of what the Home Office has been doing in reaching out to Muslim communities across the country.
"We are listening to people and establishing what their views are following the shocking events of July, and responding to whatever grievance there is.
"I also believe in establishing common ground because we all have a common antipathy to that very, very small minority of extremists who think that terrorism is the way forward.
"It is also about having a debate about the fine balance between freedom of speech and the responsibilities that go with it, whether it is on a further education or higher education campus."