The Cabinet-level group is expected to meet within weeks and will include Deputy Prime Minister Nick Clegg, Home Secretary Theresa May, Chancellor George Osborne, Metropolitan Police commissioner Sir Bernard Hogan-Howe and Andrew Parker, director general of the Security Service.
To be called the Tackling Extremism and Radicalisation Task Force (TERFOR), the group will focus on radical preachers who target potential recruits. Cameron's office said the group would focus on practical measures rather than getting bogged down in theoretical debates about Britishness.
Meanwhile, British Home Secretary Theresa May has warned that the radical Islamist groups which whip up hatred but do not advocate violence could be outlawed in the UK.
This was an attempt to curb the spread of hardline ideology and the move comes following the Woolwich murder of British soldier by a radical group member.
The Home Secretary said around 500 police and security officers were investigating the "horrific murder" of soldier Lee Rigby.
Asked if she believed there were thousands at risk of radicalisation in the UK, she replied: "Potentially."
She told on a BBC show that there were thousands of people judged to be at risk of being radicalised as she set out moves to deprive hardliners of platforms for their views. They include plans to ban more organisations accused of fomenting division and to tighten the rules on their access to the internet.
She spoke of fresh action on social media campaign. She said that messages preaching jihad are removed from the internet and more than 5,500 unacceptable postings are being deleted.
Overall aim of of this drive is to prevent extremist clerics from visiting campuses and prisons, which are considered the most fertile recruiting grounds for radicalised men.