Addressing the nation for the eighth consecutive year on the occasion of Independence Day, Dr Singh said no government has a "magic wand" to deal with the problem of corruption which needs to be tackled on many fronts and asked all political parties to "stand shoulder to shoulder" in this fight.
A day before Mr Hazare was to embark on an indefinite fast demanding a strong Lokpal, the Prime Minister made it clear that only Parliament can decide what type of Lokpal legislation can be enacted.
"I am aware of the differences of opinion on some aspects of the bill. Those who don't agree with this bill can put forward their views to Parliament, political parties and even the press. However, I also believe they should not resort to hunger strikes and fasts-unto-death," Dr Singh said. (Watch: PM's independence day speech)
Acknowledging that corruption is a big obstacle in national transformation, he said the menace should be discussed in a manner that should not create an atmosphere in which country's progress comes into question.
He also admitted that funds meant for welfare of common man end up in the pockets of government officials.
Congress slams team Anna
The Congress, meanwhile, hit out at Team Anna. Congress leaders also said Hazare and his supporters have the right to protest but the law of the land is equal for all and everything has to be done lawfully.
"If any one person says that the police is working under political pressure I think he is deliberately trying to misguide whoever is listening to him... the Lokpal Bill is in Parliament...don't understand why there is so much desperation", said senior party leader Ambika Soni. (Read: Govt justifies Delhi police denying permission to Team Anna)
BJP : Govt trying to muzzle protests
The Bharatiya Janata Party (BJP), meanwhile, slammed the Congress for behaving in an "undemocratic" manner and trying to muzzle rightful protests.
"Now when they (Ramdev and Hazare) are talking about removing corruption they are being targeted and government is looking for ways to end their agitation...There is a policy that if you hold a protest, we will not allow it. The way this government is working and the statement that the Prime Minister made is completely against democracy," BJP President Nitin Gadkari said.
The BJP-led NDA will meet in Parliament on Tuesday and finalise it strategy on cornering the Government in the House. The NDA is likely to attack the government for denying Anna Hazare the right to protest.