In his speech to the Conservative Party Conference, Mr Cameron promised to open these religious schools to inspection.
He said there was no problem with children learning about their faith in supplementary schools, but minds must be broadened, not "filled with poison".
The Muslim Council of Britain said it had concerns about the plans.
Speaking in Manchester, Mr Cameron told delegates: "Did you know, in our country, there are some children who spend several hours each day at a madrassa?
"Let me be clear: there is nothing wrong with children learning about their faith, whether it's at madrassas, Sunday schools or Jewish yeshivas.
"But in some madrassas, we've got children being taught that they shouldn't mix with people of other religions; being beaten; swallowing conspiracy theories about Jewish people.
"These children should be having their minds opened, their horizons broadened, not having their heads filled with poison and their hearts filled with hate.
"So I can announce this today: if an institution is teaching children intensively, then whatever its religion, we will, like any other school, make it register so it can be inspected.
"And be in no doubt: if you are teaching intolerance, we will shut you down."
It's only a year since plans for a voluntary code of conduct for madrassas were shelved by the Department for Education.
Now, the government is going considerably further, with plans to consult then legislate to require supplementary religious schools to register and face what is being described as a "light touch"  inspection regime.
While any law would be broadly framed to include all religions, the thresholds of numbers of children and hours per week are likely to be set at a level that would exclude conventional Sunday schools as well as home education.
This is about what is being described privately as the "hard edge" of some religious instruction that crosses firmly into the territory of inciting hatred or intolerance.
There will be no tolerance of corporal punishment, but no prescription of what or how religious beliefs can be taught.
Of course, the reality of trying to define that in law will prove complex and highly contentious.
Ofsted may be less than keen to take on the additional role of trying to enforce sanctions, which could include plans to change through to closure.
The prime minister said extremist religious supplementary schools were part of a wider problem of segregation within some communities, adding extreme madrassas "incubate these divisions".
In a statement, the Muslim Council of Britain said: "We are concerned at the Prime Minister's targeting of the supplementary schools.
"It is neither Islamic, nor prevalent in madrassas to be isolationist or to preach hate of other faiths.
"We would hope that these serious allegations can be substantiated and the evidence brought forward, so that appropriate action can be taken."
Downing Street said that the new inspection regime would apply to religious institutions offering eight or more hours of study a week to children in England.
This could include  Christian Sunday schools and Jewish yeshivas, but is more likely to cover up to 2,000 Muslim madrassas.
Many religious supplementary schools offer teaching within places of worship, but others are conducted in homes.
Currently, they are not required to register with the authorities and are not subject to inspection, but under Mr Cameron's plans, they would have to register with the Department for Education.
Faith groups would be consulted on the precise details of how inspections should be carried out and whether they should be done by the schools watchdog, Ofsted, or another body.
The BBC understands the government will launch a consultation on the plan "swiftly".
A Number 10 source said that Mr Cameron's initiative came in response to concerns raised about some madrassas by members of the Muslim community.
It was expected no problems would be found with the vast majority of madrassas, the source added.
The plans were welcomed by the counter-extremism think tank, the Quilliam Foundation.
Political liaison officer Jonathan Russell said it was "entirely sensible" to make sure the right checks and balances were in place for supplementary schools to protect all young people.
"This is going to be a long-term challenge, but this is a start," he said.
But Pascale Vassie from the National Resource Centre for Supplementary Education told the BBC the plans could be counterproductive.
"Of course quality assurance is needed but so is support, encouragement and training," she said.
"If insufficient money is spent on training and supporting what are often voluntary workers, it could be entirely counterproductive. It could even push some organisations underground."
Religious supplementary schools in England that teach children intolerance will be investigated and closed down, Prime Minister David Cameron has said.