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The NYPD has been spying on New Yorkers with the help of the CIA, dispatching covert “mosque crawlers” and infiltrating bookstores and cafes in Muslim neighborhoods, according to a blockbuster Associated Press report.

Our Doyle and Kennedy report:

The story revealed the existence of what the NYPD intelligence division calls the Demographic Unit, a secret anti-terror operation that blurs the line between foreign and domestic spying and stretches legal limits on racial profiling.

The story says sermons in mosques were regularly monitored even where there was no suggestion of wrongdoing, and that a “human mapping” operation gathers intel on the city’s cabbies and food cart operators.

“Some in the department, including lawyers, have privately expressed concerns about the program,” the AP story said.

FBI agents in New York were ordered by their bosses not to accept reports from the NYPD’s “mosque crawlers” because they might be violating the constitutionally protected freedom of religion, the story said.

Neither the City Council nor the federal government are fully aware of the secret unit’s operations, the story said.

The AP story exposes a familiar battle between civil liberties and security, but raises an important question: who gets to decide what the right balance is?

NYPD Deputy Commissioner Paul Browne blasted the AP story, saying it was “marked by outright fiction.” He insisted there are no “mosque crawlers” and that the term was made up.

“Even a piece driven by NYPD critics shows that we’re doing all we reasonably can to stop terrorists from killing even more New Yorkers,” Browne said.

He said there have been at least 13 major plots against New York since 9/11 and pointed to seven cases where information from the NYPD’s Intelligence Unit helped arrest would-be terrorists.

“We commit over a thousand officers to the fight every day to stop terrorists who’ve demonstrated an undiminished appetite to come back and kill more New Yorkers,” Browne said. “We don’t apologize for it and we’re not deterred by petty jealousies that success sometimes breeds.”

The AP said its expose was based on months of reporting and interviews with more than 40 current and former cops and feds.

It says the program to infiltrate Muslim communities was started by CIA veteran David Cohen, who was tapped in 2002 by Police Commissioner Raymond Kelly, who thought 9/11 proved the NYPD couldn’t rely on the feds to protect the city from terrorists.

Cohen created a mini-CIA inside the NYPD, with spies and analysts and an international scope.

The NYPD has a big advantage over the CIA: a diverse pool of officers who could pass in any community in the city.

Undercover officers called “rakers” went to hang out in bookstores, hookah bars and cafes, the AP said – an allegation the NYPD fiercely denied.

After lawyers in the department said it might appear that police were building dossiers on innocent people, the cops began regularly shredding documents discussing “rakers,” the story said.

The story also said officers were sent into Pakistani neighborhoods to look for minor reasons to stop cars – speeding, broken tail lights, running stop signs – so they could look for outstanding warrants or any suspicious behavior.

Arrests for even minor crimes could become leverage to persuade someone to become an informant.

“When someone is arrested who might be useful to the intelligence unit – whether because he said something suspicious or because he is simply a young Middle Eastern man – he is singled out for extra questioning,” the story said.

“Intelligence officials don’t care about the underlying charges; they want to know more about his community and, ideally, they want to put him to work.”

Early on, police asked the taxi commission to search reports on all the city’s Pakistani cab drivers, looking for those who might be pressured to cooperate.

The intelligence division cops operate far outside New York city limits – investigating people in New Jersey, Pennsylvania and Massachusetts, officials said – often rubbing the FBI the wrong way.