Video report by ITV News Political Correspondent Libby Wiener
Andrea Leadsom has come under fire for suggesting Islamophobia should be treated as a Foreign Office issue.
Labour frontbencher Naz Shah said she is "shocked" by the Commons Leader’s "baffling" comments.
The shadow women and equalities minister added Mrs Leadsom’s response "horrifically alludes to British Muslims as foreigners."
It's the third such gaff to hit the Conservative Party today.
Northern Ireland Secretary Karen Bradley has said she is"profoundly sorry" for the "offence and hurt" caused after she suggested deaths caused by soldiers and police during the Troubles were not crimes.
Meanwhile, Amber Rudd has apologised for calling Diane Abbott a "coloured woman" during a live radio interview.
Tory ex-minister Baroness Warsi, the first Muslim woman to sit in the Cabinet, said: "What is wrong with some of my colleagues?" She urged the party's MPs to "stop digging" the hole it has found itself in.
Mrs Leadsom made the remarks in response to Ms Shah’s call for a Commons debate after Lady Warsi slammed the Conservatives over Islamophobia within the party.
Ms Shah added that the all-party parliamentary group on British Muslims recently published a definition of Islamophobia.
The Commons Leader said: "The Conservative party is taking very strong action in any cases of Islamophobia that we identify.
“We have been extremely robust and urgent in our response to this."
On a definition of Islamophobia, Mrs Leadsom suggested "she can discuss with Foreign Office ministers whether that would be a useful way forward."
Ms Shah said: "I was shocked by what Andrea Leadsom said in response to my genuine call for a debate on Islamophobia.
"To say that British Muslims facing Islamophobia here in the UK is a ‘Foreign Office’ issue is truly baffling and horrifically alludes to British Muslims as foreigners.
"It just goes to show how out of touch the Tories are with a problem that their politicians and councillors are exacerbating.
"Perhaps she doesn’t want a debate as it will expose her party’s failing on the problem?
"The Tories have been skirting around this big issue for years and have not addressed the elephant in the room.
"Everyday Muslims face appalling abuse on the streets and online, and it’s time things changed. Islamophobia has become normalised, and we need our politicians and society to understand how and why it is so wrong, and that we need to eradicate it in all its forms.”
A Cabinet Office spokesman said Mrs Leadsom thought Ms Shah was referring to an international definition of Islamophobia, adding Islamophobia is unacceptable wherever it takes place.