Germany's domestic intelligence service is now monitoring the Initiative Zusammenrücken (Closing Ranks Initiative) group as a known right-wing extremist endeavour.
The far-right xenophobic settler movement, with links to well-known right-wing extremists, has sought to resettle ethnic German nationalists in concentrated areas of Germany.
A spokeswoman for Germany's Federal Office for the Protection of the Constitution (BfV), the country's domestic intelligence agency, confirmed on Thursday that it had placed the group under surveillance in a statement to the taz newspaper.
The initiative is a "cross-organizational network of right-wing extremists" with an "ethno-nationalist" agenda, the BfV spokeswoman told the newspaper.
"Its representatives openly and regularly express an exclusively ethnic understanding of 'the people' with frequent reference to National Socialist terminology," she said.
The group has sought to persuade far-right extremists to move from western Germany to areas of the former communist East Germany, particularly to the states of Saxony and Thuringia.
The secret service's new annual report warns of "increased" far-right extremist settlement efforts in recent times and separately lists ethno-nationalist settler movements.
According to the report, the far-right settler groups view their goals as the "preservation of the Germans" and understand "Germanness" to be an ethnic concept defined by far-right "völkisch" "blood-and-soil" ideology - a concept going back to the Nazis expressing the ideal of uniting race with a specific place.
BfV president Thomas Haldenwang said at the presentation of the report last Tuesday that völkische settlers were trying to take over small isolated areas in order to create strongholds there.
