Police have been accused of "institutional racism" for portraying a suicide bomber as an Islamist terrorist, a protest meeting heard.
Greater Manchester Police (GMP) apologised for stereotyping for using a fake terrorist shouting "Allahu Akbar" in the mock terror attack.
Organisers of the meeting at Longsight Saath Saath are demanding an inquiry.
GMP said it has no plans to issue any further statements on the training exercise staged at the Trafford Centre.
The scenario for the mock suicide bombing was by an extremist Daesh-style organisation although GMP had said the event was not linked to any specific terror threat.
Syed Azhar Shah, who chaired the meeting attended by about 30 people, said GMP assistant chief constable Garry Shewan's apology was not enough and "only acceptable" if those responsible resigned.
He said while the training exercise was a good idea but it was "shocking to portray Muslims as terrorists" and that only one group would commit terrorist acts.
He said: "It is also shocking what our children and community who live in this country will see themselves as; terrorists or British citizens?"
Mr Shah said further events would be held to "condemn this" and "ensure this would not happen again".
He said one apology "would not mend so many hurts".
One of those at the meeting said using a Muslim as a terrorist sent out "the totally wrong message" and "puts a wedge" between the community and GMP.
"We are all British citizens. As far as Islam is concerned it does not permit any killing."
Greater Manchester's police and crime commissioner Tony Lloyd, said it was "frustrating" the operation had been "marred by the ill-judged... and unacceptable decision" to have the terrorist shout 'Allahu Akbar' before setting off fake bombs.
Other locations in the three-day counter-terrorism exercise include Redbank Community Home in Newton-le-Willows.