Police arrested eight suspected members of a neo-Nazi militant group driven by racist ideology and conspiracy theories who had been training in warfare for the downfall of the German state, prosecutors said on Tuesday.

A 450-strong police operation was mounted to dismantle the group, named by prosecutors as "Saechsische Separatisten", or Saxony Separatists, which has the abbreviation SS, the same as the Nazi party's elite militia.

Kurt Haettasch, the AfD politician, represents the eastern state of Saxony, where the party came close to winning a state election in September.

Der Spiegel said that the politician had been treasurer of the AfD youth organisation "Junge Alternative" in Saxony since October.

AfD's youth wing has been classified as an extremist entity by Germany's domestic intelligence service, which is also monitoring the AfD at national level for suspected extremism.

"Our party stands firmly on the ground of a free and democratic basic order," an AfD spokesperson said, adding that the party had "nothing in common" with the Saxony Separatists.

AfD said it could not confirm the Spiegel report that Haettasch was among the suspects.