The Turkish consulate in Rotterdam has infuriated Dutch MPs by calling on Turkish groups in the Netherlands to inform it of insults against President Recep Tayyip Erdogan.
Several MPs complained of the "long arm of the Turkish state" while the Dutch PM said it was a "strange" move.
Last week, Germany allowed the prosecution of a top satirist for insulting Mr Erdogan to proceed.
Jan Boehmermann had read a crude poem on TV, aimed at testing German law.
Both Germany and the Netherlands have old lese majeste laws against insulting the head of a friendly head of state.
Initially the Turkish embassy declined to comment, saying merely that it had seen an increase in hate messages.
But after the story had prompted an outcry in the Netherlands, the embassy said there had been a misunderstanding.
It said a consulate employee had used an unfortunate choice of words in its message sent to Turkish groups in the Netherlands, Dutch broadcaster NOS reported. Apparently the consulate had only asked to hear about racist statements and hate campaigns.
Some 400,000 people of Turkish origin live in the Netherlands and the Dutch branch of Turkish opposition party CHP said it had taken calls from a number of concerned people.
"They're scared because they said something critical in the past for example on Facebook or Twitter," a spokesperson told Dutch Turkish website Zaman Vandaag.
The Dutch cabinet called for a clarification from Turkey over the hotline, amid demands from some MPs for the Turkish ambassador to be summoned by the foreign ministry.
Prime Minister Mark Rutte said he was surprised. "It's not obvious what the Turkish government is trying to achieve with this action," he said.
Integration Minister Lodewijk Asscher accused the Turkish embassy of interfering in freedom of speech in the Netherlands.
Almost 2,000 cases have been opened in Turkey itself for insulting Mr Erdogan. But there has been uproar in Germany that a satirist could apparently be prosecuted at the behest of a foreign power.
Last week Chancellor Angela Merkel, who had termed the poem "deliberately offensive", decided to let prosecutors decide whether to press charges.
The Turkish consulate's offending email
"To the relevant person,
We ask urgently for the names and written comments of people who have given derogatory, disparaging, hateful and defamatory statements against the Turkish president, Turkey and Turkish society in general, which have reached the members and relatives of your non-governmental organisations or fellow citizens from your surroundings via their social media addresses (such as Twitter or Facebook) or via the official address and e-mail addresses of your non-governmental organisation, to be sent in before the close of business on 21 April 2016 by email to the consulate general in Rotterdam
The latest affair has shone yet more light on old laws aimed at protecting friendly leaders.
Chancellor Merkel has promised that article 103 of the German criminal code, which threatens imprisonment for insulting a head of state, will be removed by 2018.
The Dutch government, too, has said it will reform its old law. The justice minister said the constitution should not be a museum for out-of-date articles.