"When the Muslim population gets to a critical mass you have problems," Israeli told The Sydney Morning Herald.
"That is a general rule, so if it applies everywhere it applies in Australia.
"The trains in London and Madrid were not blown up by Christians or Buddhists but by Muslims, so it is them we have to beware."
Head of the council, Colin Rubenstein, said he was concerned by Israeli’s implication that the Muslim community was a threat or danger.
"Islamic extremism is a genuine and serious global problem, but it is completely wrong to single out all Muslims for suspicion or negatively stereotype the Muslim community as a whole in this way," he said.
The New South Wales Jewish Board of Deputies also rejected Israeli’s views.
"These comments do not reflect the position of the Jewish community and are unhelpful in the extreme," Vic Alhadeff said.
"The Jewish community has a strong and proud record in fighting racism, and condemns all expressions of bigotry."
Professor Israeli, an Islamic expert from Jerusalem’s Hebrew University, said that the risk of violence increased when the Muslim population rose.
"Greeks or Italians or Jews don’t use violence," he told the Herald.
"When there are large Muslim populations who are prepared to use violence, you are in trouble. If there is only one or two percent they don’t dare to do it -- they don’t have the backing of big communities.
Government backbencher Bruce Baird described Israeli’s comments as "racist and totally unacceptable". He said a more tolerant approach was needed to engage with the small minority of Muslims who had trouble with Australian values.
Muslims account for about 1.5 percent of the Australian population.