David Cameron made the comments after several controversial comments from the US Republican presidential front-runner.
Mr Trump has called for a complete ban on Muslims entering North America until they can "figure out what the hell is going on", and said that some parts of London had become so radicalised that police had become "afraid for their own lives".
MPs were forced to debate whether Donald Trump should be banned from entering the UK, after more than 570,000 people signed a petition called for him to be prohibited from entering.
They decided that the billionaire tycoon should not be banned.
Mr Cameron said: "I think the problem with what Donald Trump has said, and what some others say too, is they are making a fundamental mistake of trying to blame all of Islam and all Muslims for what is the ideology and the actions of a minority, and I think that's wrong.
"In many ways, it actually helps the extremists, because they want to create a clash of civilisations between Islam and Christianity, or Islam and the West.
"Actually, what's happening is not a clash of civilisations.
"It is a fight within Islam, where the overwhelming majority rightly see Islam as a religion of peace, and want to live in successful multi-racial, multi-ethnic, multi-faith democracies like ours, and make an incredible contribution to our country, as opposed to a small minority that believe this rhetoric of poisonous extremism."