A German police car waits outside the Federal Court of Justice in Karlsruhe, on May 6, 2015. PHOTO: AFP
The early-morning swoops in five states occurred with the country already on edge after authorities last week said they had foiled a planned terrorist attack by a German-Turkish couple armed with a pipe bomb and other weapons.
They also came amid an increase in attacks on lodgings for asylum seekers as Germany takes in record numbers of people fleeing conflicts in the Middle East and Africa.
The raids turned up "pyrotechnics with large explosive power" that investigators believe were intended for use in attacks, said the federal prosecutor's office in the southwestern city of Karlsruhe.
"To what extent the suspects had set targets or dates for attacks will be the subject of further investigation," it said in a statement.
The four suspects, three men and a 22-year-old woman identified only as Denise Vanessa G, are accused of starting a "far-right terrorist organisation" called Oldschool Society with a larger group of people last November.
A German investigator loads evidence seized from an apartment in Augsburg, on May 6, 2015 PHOTO: AFP
Group emblems published on media websites feature Germanic runes popular in the neo-Nazi scene, bloody hatchets and skulls with the slogan: "One bullet is not enough".
Amateur videos posted on YouTube and attributed to Oldschool Society use racist and xenophobic slurs in appeals for new recruits to join and feature members of the group posing in neo-Nazi gear.
Two of the accused, named as 56-year-old Andreas H and Markus W, 39, are believed to be the ringleaders, using the titles "president" and "vice president".
The fourth suspect was listed as 47-year-old Olaf O. All are German citizens, prosecutors said.
"According to the findings to date, the aim of the organisation was to mount in smaller groups attacks on well-known Salafists, mosques and hostels for asylum seekers in Germany," prosecutors said.
A German police investigator removes evidence out of the flat of an alleged member of a far-right terrorist group in Augsburg, on May 6, 2015 PHOTO: AFP
In the case last week, the male suspect captured near Frankfurt had contact with the ultra-conservative Islamic Salafist community. Investigators believe the man and his wife had aimed to attack a professional bicycle race in the area, which was cancelled as a precaution after the arrests.
The four far-right suspects were arrested based on warrants issued Tuesday by a federal judge on charges of founding a terrorist organisation.
About 250 officers from special units of police forces in five states and the federal police searched the homes of the four accused as well as those of five other suspects.
The investigation was launched based on information gleaned by agents from Germany's domestic security watchdog, the Office for the Protection of the Constitution, the prosecutors said.
Read: PEGIDA anti-Muslim riots: Is Germany flirting with its dark past?
German investigators have been on high alert for violent far-right groups since it emerged in 2011 that a neo-Nazi cell calling itself National Socialist Underground (NSU) allegedly gunned down 10 people, mainly Turkish immigrants, between 2000 and 2007.
The country's intelligence services were forced to admit major failings in the probe of the murders.
Interior Minister Thomas de Maiziere told reporters that Oldschool Society may have had the potential to become a deadly extremist force in Germany similar to the NSU.
"As worrying as this development is, we are very happy about this significant investigation success," he said.
Meanwhile violence against refugee shelters is on the rise.
Two German non-governmental organisations, Amadeu Antonio Foundation and Pro Asyl, said in a recent report that 25 such homes have been attacked since the start of the year including three with firebombings.
Activists blame the rise in attacks in part on anti-migrant sentiment whipped up by groups such as the high-profile movement PEGIDA, "Patriotic Europeans Against the Islamisation of the Occident", which organised a series of weekly marches that drew thousands of participants and intense media coverage.
Last year, asylum requests to Germany rose 60 per cent to more than 200,000, leaving many communities scrambling to house the newcomers in old schools, public buildings, mobile homes and army barracks.
Overseas Development Minister Gerd Mueller said Tuesday the number could double to reach up to 400,000 this year.
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