Cameron made the announcement following a review of the group in a written statement to the House of Commons as the British Parliament closed for Christmas.
"The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism. Parts of the Muslim Brotherhood have a highly ambiguous relationship with violent extremism," he said.
After the review, undertaken by former British ambassador to Saudi Arabia Sir John Jenkins, delivered stronger than expected findings, the UK government said it will keep the group under review and consider taking action against the Muslim Brotherhood under the new counter-extremism strategy and could end up banning it in Britain in future.
The Brotherhood played a leading role in Egypt's 2011 revolution and is considered a terrorist organisation by several countries. The Muslim Brotherhood denies this, saying it is a peaceful political movement.
"We will challenge extremists' poisonous narratives and promote positive alternatives that show vulnerable people that there are better ways to get on in life," Cameron said.
That is to include keeping a close watch on the views promoted by Muslim Brotherhood associates in Britain in Arabic and English, as well as their activities.
He said Britain would continue to refuse visas to members and associates of the Muslim Brotherhood who are on record as having made extremist comments.
Lawyers for the Muslim Brotherhood have said that any "undue" criticism of the group will be challenged in the courts.
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