David Cameron was accused on Wednesday of forming an alliance with "dubious" partners in the EU after the Tories joined forces with two controversial parties in the European parliament.

The prime minister came under fire after members of the European Conservatives and Reformists (ECR) group in the European parliament voted to admit the Danish People's party and the True Finns.

The move means the ECR group, founded after Cameron broke with the main centre-right EPP-ED group, now has 55 MEPs and could soon be the parliament's fourth largest pan-European group.

Labour warned that the alliance with the anti-immigration parties, whose MEPs sat alongside Ukip in the last parliament, would send the wrong signal.

The Guardian reported last month that Martin Callanan, chair of the ECR in the last parliament, had been courting the Danish People's party (Dansk Folkeparti), which topped the poll in Denmark. Callanan, who lost his seat in last month's election, confirmed he had been in talks with Morten Messerschmidt, who stood as an MEP for the Danish People's party which topped the poll in Denmark.

A spokesman for the party, which is fiercely anti-immigration, once likened the Muslim headscarf to the swastika.

Messerschmidt was convicted in 2002 for publishing material that appeared to suggest that there could be a link between a multiethnic society to rape, violence and forced marriages, the FT reported. Jussi Halla-aho, elected as a True Finn MEP, was convicted in 2012 after posting a blog which claimed that Islam "reveres paedophilia", according to the FT.

Gareth Thomas, the shadow Europe minister, said: "David Cameron must now be open with the British public about the dubious views of his new partners in Europe, and explain the decision to form an alliance with politicians whose views are rejected by many mainstream leaders across Europe.

"He considered these parties too extreme to ally with in 2009, so now he needs to explain what has changed. David Cameron has isolated himself from allies in the EU, and now his MEPs are withdrawing to the extreme fringes of acceptable politics within Europe."

Mats Persson, director of the Open Europe thinktank, told the FT: "This will raise the eyebrows of many in Europe who thought the Danish People's party in particular wouldn't pass the Tory party's blush test. The good news for the Tories is that they're on course to become the third largest party in the European Parliament. The risk however is that they drive reform-minded liberal parties straight into the arms of the big federalist block in the EP."

Tory MEPs were said to have been influenced by Syed Kamall, their leader in the European parliament, who is Muslim.

The FT reported Kamall as saying: "The Danish People's party is on a political journey. It now has a policy of controlled immigration and disagrees with those on the left who would allow uncontrolled immigration and benefit tourism.There is a clear distinction that the left-wing media often fails to make between a party that wants to control immigration and one that seeks to demonise immigrants. The DPP is the former."

Sir Robert Atkins, a long standing Tory MEP who served as a minister in John Major's government, told the Guardian last month that admitting the Danish People's party and the True Finns to the Tories' ECR group would be damaging for Britain and for the Conservatives. Atkins said: "The two fundamental priorities are the best interests of Britain and the best interests of a negotiating position for the prime minister in the lead up to the referendum. Anything which causes problems for the prime minister in relation to that is something that I and many of my colleagues will be very upset about. Those options [admitting the DPP or the Finns Party] would seem to me to be unhelpful in achieving the prime minister's objectives."