Washington: "If there is anyone out there who thinks we are confused about who our enemies are -- that would come as a surprise to the thousands of terrorists who we have taken off the battlefield," he said.
"They know who the nature of the enemy is. So, there is no magic to the phrase "radical Islam". It is a political talking point. It is not a strategy," he said.
Obama said groups like the Islamic State and Al-Qaeda want to make this war a war between Islam and America, or between Islam and the West. They want to claim that they are the true leaders of over a billion of Muslims around the world who reject their crazy notions.
"They want us to validate them by implying that they speak for those billion-plus people, that they speak for Islam. That's their propaganda, that's how they recruit. And if we fall into the trap of painting all Muslims as a broad brush, and imply that we are at war with the entire religion, then we are doing the terrorists' work for them," he said.
"Where does this stop? Are we going to start treating all Muslim-Americans differently? Are we going to start subjecting them to special surveillance? Are we going to start discriminate them, because of their faith?" Obama asked.
"Because that's not the America we want. It does not reflect our Democratic ideals. It won't make us more safe, it will make us less safe, fueling ISIL's notion that the West hates Muslims, making Muslims in this country and around the world feel like, no matter what they do, they're going to be under suspicion and under attack," he said.
Obama also said that such treatment makes Muslim-Americans feel their government is betraying them.
"It makes Muslim-Americans feel like their government is betraying them. It betrays the very values America stands for. We have gone through moments in our history before when we acted out of fear, and we came to regret it. We have seen our government mistreat our fellow citizens, and it has been a shameful part of our history," he said.
Obama said this is a country founded on basic freedoms, including freedom of religion.