Chancellor Angela Merkel condemned a series of anti-Muslim demonstrations centred on the eastern city of Dresden, saying via an aide on Friday that there was "no place in Germany" for hatred of Muslims or any other religious or racial group.
"In the name of the government and the chancellor I can say quite clearly that there is no place in Germany for religious hatred, no matter which religion people belong to," said the chancellor's spokeswoman, Christiane Wirtz.
"There is no place for Islamophobia, anti-Semitism or any form of xenophobia or racism," she said of the growing Monday evening marches in Dresden under the motto PEGIDA, standing for "Patriotic Europeans against the Islamization of the West".
Public expressions of anti-immigrant sentiment are largely taboo in mainstream German politics because of the Nazis' mass-murder of Jews and other groups in the Holocaust. Merkel argues that Germany needs immigrants to avoid demographic crisis.
But local officials say they are struggling to cope with the largest number of asylum-seekers in Europe, with net immigration at its highest levels in two decades.
A backlash is being felt: this week Merkel's conservatives debated banning the burka, the full body covering worn by some Muslim women, and her Bavarian allies had to drop a proposal to oblige immigrants to speak German at home.
The latest PEGIDA march on Monday drew up to 10,000 people and almost as many counter-demonstrators. The organisers, who began two months ago with a few hundred people, say they are not against immigrants but want to protest against Islamic extremism and the influx of asylum-seekers.
Interior Minister Thomas de Maiziere said not all the marchers are racists and they include some who are "expressing their fears about the challenges of the times".
Dresden is the site of Germany's biggest annual neo-Nazi march on the anniversary of the World War Two bombings.
German officials are alarmed at the rise in both anti-Muslim and anti-Semitic sentiment. This year has seen right-wingers join forces with soccer hooligans against Salafist Muslims and a rise in attacks on Jews linked to the Middle East crisis.
On Thursday night, buildings in a Bavarian town being turned into refuges for asylum-seekers were set on fire and daubed with swastikas. Merkel condemned all such crimes, Wirtz said.
Earlier this week, the head of Germany's Central Council of Muslims, Aiman Mazyek, urged politicians to speak out to avoid giving the impression that racism had "become respectable".