The Republican presidential front-runner made the remarks after addressing high school students in Urbandale, Iowa, at their homecoming yesterday.
Asked whether Muslims pose a danger to the country, the 69-year-old real estate tycoon was quoted by CNN as saying, "I love the Muslims. I think they're great people."
During a question-and-answer session with students, Trump was unable to avoid being asked about the latest political controversy dogging his campaign -- his decision not to correct a supporter this week who called President Barack Obama a Muslim.
Asked whether he would consider putting a Muslim in his Cabinet or on his ticket, the billionaire businessman said, " Oh, absolutely. No problem with that."
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At a New Hampshire town hall on Thursday, a supporter stated that Obama was a Muslim and not American -- which Trump did not correct -- and asked the candidate how he plans to "get rid of" Muslims in the country.
"We're going to be looking at a lot of different things. You know, a lot of people are saying that and a lot of people are saying that bad things are happening," Trump had responded without correcting the supporter, inviting a barrage of criticism.
"Am I morally obligated to defend the president every time somebody says something bad or controversial about him? I don't think so!" Trump wrote.
In another tweet, he said: "If I would have challenged the man, the media would have accused me of interfering with that man's right of free speech.