Britain's main Islamic group said it should be called Genocide Memorial Day and commemorate all mass killings, including those in Bosnia, Rwanda and Palestine.
"Israel has also committed mass killings," Inayat Bunglawala, spokesman for the Muslim Council of Britain, said.
"It is undeniable," he said. "Israel has dispossessed a Palestinian nation. It is an insult to them if we don't recognise their deaths. The cry Never Again should be for all people."
The council, representing 1.6 million Muslims in Britain, has written to Home Office Minister Charles Clarke spelling out the reasons for declining their invitation to attend.
"We are not belittling the Holocaust. We share the immense pain and anguish felt in the Jewish community about the Holocaust, but feel Britain is a multi-faith country and everyone should be involved," Bunglawala said.
This had been the council's standpoint since the inception of Holocaust Memorial Day in 2001, according to him.
"We believe the term Holocaust Memorial Day in the title is not inclusive," Bunglawala added.
UK Jews respond
The Board of Deputies, an umbrella group for Britain's 750,000 Jews, was disappointed by the council's stance. "It is regrettable that they have declined this year. especially as we commemorate the liberation of the camps by Allied forces," a spokesman said.
"The board refute any suggestion that the Israelis are committing genocide," he added.
As part of British commemorations, Queen Elizabeth is hosting a reception on Thursday for Holocaust survivors and British veterans who liberated the death camps.
The Nazis murdered millions of Jews and other groups and nationalities, including Poles, homosexuals, Soviet prisoners and gypsies. Millions more were imprisoned or forced to work as slaves.