I'm all for liberal guilt. Liberals, after all, have plenty to be guilty about. But occasionally their justifiable self-loathing and numerous confusions lead to outright betrayal. We've seen betrayal on an epic scale in the refusal of the liberal world to put aside its hatred of war and Bush and support the Kurdish and Arab democrats in Iraq. A smaller and more homely example has come from the widespread liberal reaction to New Labour's proposal to ban the incitement of religious hatred. An unusually stupid seven-year old could take apart David Blunkett's argument for censorship in an instant. In one of the rare moments for quiet reflection his hectic private life allows him, the Home Secretary has reasoned that prejudice against Muslims has grown since 11 September, and he is right. 'Muslim' has become a synonym for 'Paki' and 'wog' and he's right on that too.

But he then concludes that restrictions on inciting racial hatred should be extended to inciting religious hatred, loses the thread of his syllogism and descends into outright absurdity.

British neo-fascists who cover anti-Asian and anti-Arab racism with a religious gloss could be taken to court under the existing and uncontroversial laws against the incitement of racial hatred. Any half-decent prosecutor should be able to reveal the clumsy strategies of the British National Party and others to deliver coded racist propaganda in a morning – and the distinction between inciting hatred against a race, which can't be right or wrong, and against ideas, which can, would be maintained. (The Government would be on far more principled grounds, incidentally, if it banned the incitement of sexual hatred, but I suppose that would lead to the suppression of half of modern journalism, most of modern literature and nearly all of modern religion.)

Presented with the flimsiest of justifications for an assault on the basic principle of liberalism that ideas must be subject to free debate, a significant section of liberal opinion has crossed over to the other side.

Or to put it another way, things have come to a pretty pass in England when we have to rely on the Tory Party to stand up for freedom of speech. But that, I'm afraid, is the state we're in.

In the whole debate, only the Tories demurred and sensibly pointed out that the law would be impossible to enforce.

New Labour is right behind Blunkett, obviously. As are the increasingly illiberal Liberal Democrats who declared they wanted 'inflammatory language' to be punished. Trevor Phillips of the Commission for Racial Equality spoke for both parties when he denied prohibition would lead to bans on jokes or literature which criticised religion, and would only protect believers, not their beliefs.

Phillips's belief, widespread among liberal turncoats, is that it's possible to separate an idea from the people who seek to put that idea into practice. Is it? Do you loathe militant religion while retaining respect for Osama bin Laden? Did you despise Thatcherism and all its works while speaking of Margaret Thatcher in a kind and sympathetic manner? Do you oppose fascism while keeping fascists within your circle of friends?

In a debate with me on the website opendemocracy.net, the liberal authoritarian philosopher, Julian Baggini, asserted: "As religious people themselves might put it: you can hate the sin and love the sinner." They do put it that way: the mantra comes from born-again Christians who assure homosexuals that they love them while wanting to make homosexual love illegal. But it hasn't convinced many gays. On the whole they would rather be hated by bigots and free than loved by bigots and oppressed.

In any case, and for all their cant, I doubt if religious fundamentalists do love homosexuals. As ideas can only be implemented by individuals, it strikes me as impossible for them or anyone else to separate the actor from the action.

What New Labour, the Lib Dems, Phillips, Baggini and the rest of the tongue-biting crew want is a country where everyone is nice to each other. Leaving aside the desirability of living in such a stifling place, they fail to acknowledge that much of religion isn't nice. To be sure, it is more than ready to use the language of victimhood. There are Jews who chant the slogans of anti-fascism and claim that all critics of Israel are anti-Semites, Christians who describe their opponents as 'virulent bigots' and 'hate-speak-mongers', Hindu nationalists who say they merely want to end the 'special privileges' of India's Muslim minority, and Muslims who ignore the slaughter in Sudan, as they ignored the slaughter in Saddam's Iraq, so that they can concentrate their indignation on Palestine, Chechnya and Kashmir, in order to feed the fantasy that only unbelievers oppress Muslims.

Persecution manias have infected all religions and all of them will want to use the law against incitement to religious hatred. But how? In the past, what stopped this nonsense in its tracks was the thought that no one incites hatred against a religion as much as the adherents of another religion.

To a devout Jew, what could be more hateful than Christianity's claims that Jesus was the son of God? To a devout Christian, what could be more hateful than Islam's claims that Jesus was only a bog-standard prophet? To devout Jews, Christians, Muslims, and for that matter, Hindus, Buddhists, Zoroastrians, Jains, Baha'is, Mormons and Moonies, what could be more hateful than atheists' claims that there are no gods and they should grow up? To the fundamentalist, anyone who recommends another path is sending people to hell.

People can't choose their skin colour, or their sex or their sexual orientation, which is why racism and misogyny are so repellent. But a religion is a system of ideas like any other, and if you're going to make inciting hatred against an idea illegal, you really should be ready for the consequence that upholders of the idea will demand the punishment of their opponents. This is happening in Australia as I write. Muslims have succeeded in persuading prosecutors to bring a case against a radical Christian group which condemned Islam. The poor old judge has begged both sides to go away and reach an amicable compromise, but they won't of course. Compromise is heresy.

Last year the House of Lords tried to find a way round the ludicrousness of one religion demanding the prosecution of another for, say, persuading its followers to convert. They did their best, but at the end the peers pretty much threw up their hands in despair and concluded: "The threshold [before a prosecution was allowed] would have to be quite high, so as to allow for critical – even hostile – opposition. But the ceiling would need to be low enough to ensure that those who abide by the beliefs under attack are not discouraged from exercising their freedom to hold and express them. We find this a difficult issue."

And so it is. Cases would have to be approved by the Director of Public Prosecutions, and he has already said that his permission would be forthcoming only in very special circumstances. This admirable self-restraint doesn't get the supporters of censorship off the hook. If the DPP and the Government's other law officers have to vet cases, then a decision not to prosecute will be as political as a decision to prosecute.

Suppose there's a new Salman Rushdie case. I assume the law officers would resist demands to prosecute a novelist – although you can never be sure with New Labour. If they refused, wouldn't Muslim fundamentalists feel discriminated against? In the Rushdie affair, the fact that Britain's blasphemy laws covered Christianity but not Islam only deepened the anger.

A more recent example would be Ken Livingstone's and the anti-war movement's new friend Yusuf al-Qaradawi. If he were to return to Britain, and the papers were once again to look at the demands on his website for the murders of Jews and homosexuals and his excuses for rapists and wife-beaters, would he be prosecuted or wouldn't he? Either way it's easy to see how there would be trouble from angry Jews and homosexuals on the one hand or Muslims on the other.

There are times when even a government as busy and silly as this one should learn that it's best to leave well enough alone. Across the world, religion is going through a dark and hysterical period. It's best not to offer it the prospect of fulfilling the dirty desire at the root of all faiths that the law should be used to enforce conformity.

Meanwhile what is there left to the said about English liberalism? Why can't its adherents stand by their principles? If only for once? If only for five minutes? In this case, betrayal has come because the majority of British Muslims are at the bottom of the social pile. The dear old liberals feel guilty about them. But instead of offering them help, they pander to the most reactionary mullahs among them who are as determined as any racist to keep the faithful in their place. And people wonder why it is that the words 'liberal' and 'hyprocrite' find themselves placed next to each other in so many sentences.