A Christmas nativity scene was vandalised - with the baby Jesus figure beheaded.
The nativity scene in Ilford, including the Virgin Mary and Joseph, was "smashed to pieces", while the infant Jesus was decapitated.
The figurines were installed outside Redbridge Town Hall, High Road, on December 17, for the second year running after a 21-year absence by youth councillor for Epping Hannah Chowdhry.
The statues were installed and paid for by the British Pakistani Christian Association to remind residents of the meaning of Christmas.
Hannah's father Wilson Chowdhry, chairman of British Pakistani Christian Association, said: "The belief of local pastors and Christian leaders is that vandals would have simply smashed the figurines but that the beheading is evidence of extremist intent.
"The borough has an increasingly tarnished reputation or extremism, cases such as that of Faisal Bashir and the training of the London Trio Bombers does nothing to quell this perception.
"I may be wrong and it may just be some warped teenagers of no faith that have done this but the fact that the police investigation into this desecration is stalling is very disturbing as it does nothing to quell community anxiety.
"When I called police they had stated that it had been reported earlier but could find no progression and believed the crime was removed from their database which smacks of protectionism and over politically correct behaviour, which I could also be wrong about.
"These concerns are real and they are creating anxiety and polarization in our community. Even if this is not the work of extremists local Christians need to be put at ease."
The Guardian Series has approached the Metropolitan Police for a comment.
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