THE US is losing the war of ideas in the Islamic world, failing to elucidate its policies to Muslims wary of American intentions and "self-serving hypocrisy", a Pentagon advisory panel has found.

The Defence Science Board, in a report made available today, urged the creation of a "strategic communication" apparatus within the White House and an overhaul of public diplomacy, public affairs and information dissemination efforts by the Pentagon and State Department.

"If we really want to see the Muslim world as a whole and the Arabic-speaking world in particular move more toward our understanding of 'moderation' and 'tolerance,' we must reassure Muslims that this does not mean that they must submit to the American way," the report stated.

The toughly worded report said that while America's efforts to explain its policies have failed, improved public relations efforts cannot sell faulty policies.

"Muslims do not hate our freedom, but rather they hate our policies," the panel stated.