The prime minister said however that it was now time for the US president to galvanise the moderates, bring in the non-governmental organisations and social movements so that more people would see the importance of taking a moderate stance.
"If you take an extremist or an extreme position then you are going to aggravate the situation," he said in an interview with Bloomberg on Monday in New York.
Najib was responding to a question on the position taken by Obama in the recent plans by a pastor in Florida to burn copies of the Quran to commemorate the Sept 11 attacks.
The pastor later cancelled the plans amid a flurry of condemnations, including from Obama who said that it would only benefit the al-Qaeda and endanger US troops Afghanistan and Iraq.
In the six-minute interview, Najib was asked on a number of issues including Islamophobia.
Najib said: "This is a very important issue that we need to deal with because lately, we're seeing a resurgence, if you like, or an upswing in terms of fearing Islam or Islamophobia."
"There is a danger we are being pressured by the periphery, meaning the extremists and I don't mean just extremists among the Muslims.
"There are extremists among Christians, there are extremists among the Jews. But what is important is for us the majority, the moderates -- and in fact I made a clarion call -- that there should be a movement of the moderates," he said.
He added that it was vital "to capture the higher ground" and not allow the extremist to dictate and push their agenda to impress the majority.
Najib is currently in New York to attend the 65th United Nations General Assembly (UNGA) and the Asean-US Summit held on the sidelines of UNGA.
During his intervention at the Asean-US Summit, Najib conveyed to Obama that Malaysia wanted to help the US to overcome Islamophobia to allow the American society a better understanding of Islam and dispel negative perceptions towards the religion.
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