David Cameron has said he wants to establish a "complete picture" of the Muslim Brotherhood amid concerns about its involvement in Islamist extremism in the UK and overseas.
The Prime Minister has ordered an inquiry into the organisation's "philosophy and activities", with information being gathered by both MI5 and MI6.
Speaking at a No 10 news conference, he said that the Government was committed to encouraging people away from the path of extremism.
"We want to challenge the extremist narrative that some Islamist organisations have put out," he told reporters following talks with new Italian prime minister Matteo Renzi.
"What I think is important about the Muslim Brotherhood is that we understand what this organisation is, what it stands for, what its beliefs are in terms of the path of extremism and violent extremism, what its connections are with other groups, what its presence is here in the United Kingdom. Our policies should be informed by a complete picture of that knowledge," he said.
"It is an important piece of work because because we will only get our policy right if we fully understand the true nature of the organisation that we are dealing with."
According to The Times, review was prompted by evidence received by the Government that Brotherhood leaders met in London last year to plot their response to events in Egypt.
Since the military ousting of Brotherhood leader Mohamed Morsi as president in July, it has been blamed by Cairo for a campaign of violence.
The group insists it remains an entirely peaceful organisation but is accused of being behind a wave of deadly attacks on the police and military.
Responsibility for a bomb attack on a tourist bus in the Sinai peninsula which killed three South Koreans from a church group and the Egyptian driver, is also among issues being examined.
The Prime Minister's review is being led by Sir John Jenkins, Britain's ambassador to Saudi Arabia, which has also declared the Brotherhood a terrorist organisation.
There is pressure from Gulf states for tougher action, with Qatar facing sanctions from neighbours over its continued support for the Brotherhood.
Initial work was said to have been carried out by National Security Adviser Sir Kim Darroch.
The Times quoted officials as saying it was "possible but unlikely" the Brotherhood would be added to the list of groups banned by Britain for terrorist connections.
Mr Morsi and many other senior figures are imprisoned facing trial in Egypt following the coup, which resulted in protests that killed at least 1,000.
Mass trials of his supporters - which have already resulted in hundreds of death sentences - have met with international condemnation.
The Brotherhood - whose political and charitable model has been widely copied - has long had a presence in London, but there have been reports that a significant number of prominent members have fled to the city from Egypt.
An Islamic charity office above a disused shop in Cricklewood, north west London, is said to be one meeting place.
Mr Cameron's official spokesman said the decision to launch a review was not prompted by any specific new threat.
"Over a period of time, the Prime Minister has given thought and consideration to this," the spokesman told a regular Westminster media briefing.
"He thinks there is an opportunity to step back and take a view of this organisation and its linkages throughout the region."