"It's not only shameful and contrary to our values to say that people of a certain religion should never come to this country, or to claim that there are no real people of the Muslim faith who share our values, and to have the kind of dismissive and insulting approach," Clinton said.
She said this in response to a question about Islamophobia in the US at an Iowa townhall organised by the CNN yesterday.
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"One of the most distressing aspects of this campaign has been the language of Republican candidates, particularly their front-runner, that insults, demeans, denigrates different people," Clinton said.
"He (Trump) has cast a wide net. He started with Mexicans. He's currently on Muslims. But I found it particularly harmful the way he has talked about Muslims, American-Muslims and Muslims around the world. And I have called him out continuously about that," she said.
"It's not only shameful and offensive, which it is. I think it's dangerous. And it's dangerous in several ways," she said.
"It's dangerous because American-Muslims deserve better. And now their children and they are the target of Islamophobia, of threats. I've met a number of parents who said their children are afraid to go to school because they are worried about how they will be treated," she added.
"We cannot tolerate this. We must stand up and say every person in this country deserves to be treated with respect. And we must stand up against the... Bullying," she said amidst applause from the audience.
The Democratic presidential front-runner also said the US needs a coalition that includes Muslim nations to defeat the Islamic State and with Trump's rhetoric it may get difficult to build and sustain that coalition.
"It is pretty hard to figure out how you're going to make a coalition with the very nations you need if you spend your time insulting their religion. So we need to stand up and point out how wrong this is," Clinton said.
"In just the past week, under the guise of 'outreach' to African Americans, Trump has stood up in front of largely white audiences and described black communities in such insulting and ignorant terms.
"But when I hear them, I think to myself how sad. Donald Trump misses so much, he doesn't see. This is a man who clearly doesn't know about Black America and doesn't care about Black America," she said.
"And he certainly doesn't have any solutions to take on the reality of systemic racism and create more equity and opportunity in communities of color and for every American. It really does take a lot of nerve to ask people he's ignored and mistreated for decades, 'What do you have to lose?' Because the answer is everything," she said.
"Farage has called for the bar of legal immigrants from public school and health services. Has said women, and I quote, 'are worth less than men,' and supports scrapping laws that prevent employers from discriminating based on race.
"That's who Donald Trump wants by his side when he is addressing an audience of American voters," she said.
She also included Vladimir Putin in the poll campaigning, attacking the Russian president for being the "godfather of this global brand of extreme nationalism."
"He talks casually of abandoning our NATO allies, recognising Russia's annexation of Crimea, giving the Kremlin a free hand in Eastern Europe. American presidents from Truman, to Reagan, to Bush and Clinton, to Obama, have rejected the kind of approach Trump is taking on Russia. And we should, too," she said.
"All of this adds up to something we have never seen before. Of course there's always been a paranoid fringe in our politics, a lot of it rising from racial resentment. But it's never had the nominee of a major party stoking it, encouraging it, and giving it a national megaphone. Until now," she said.