Benjamin Netanyahu’s decision to enter an electoral pact with a party of ultranationalist extremists has drawn rare criticism from an influential pro-Israel group in the US.

The American Israel Public Affairs Committee (Aipac), which has generally given unflinching support to the Israeli leader during his 13 years in power, called the Jewish Power party “racist and reprehensible”.

Aipac, which receives Netanyahu as a celebrity, with adoring crowds at conferences, joined a chorus of condemnation worldwide from Jewish and Zionist groups shocked by the agreement with the far-right party.

Netanyahu helped orchestrate the merger last week of Jewish Power with another ultranationalist ally, Jewish Home, that would give him a better chance of forming a majority government in an election on 9 April.

Aipac retweeted a statement by the American Jewish Committee, another major pro-Israel advocacy group. Although not mentioning Netanyahu by name, it warned that Jewish Power might conceivably enter government under the new deal.

“The views of Otzma Yehudit are reprehensible,” it said, using the group’s Hebrew name. “They do not reflect the core values that are the very foundation of the State of Israel.” It added that it would be up to Israel’s elections commission to decide if the party could run.

A former long-time Aipac official, David Kreizelman, said the group “very rarely” comments on domestic Israeli politics. “It’s pretty major. It’s a very strong statement,” he said.

Jewish Power’s leaders are ideological successors to Meir Kahane, a US-born rabbi who served one term in parliament 1984. His Kach movement was later banned by Israel and the US under anti-terrorism laws.

He advocated for a Jewish theocracy, the expulsion of millions of Palestinians and a ban on sex and marriage between Jews and Arabs.

After moving to the US and setting up the militant Jewish Defense League, he was imprisoned for bombmaking and later assassinated in 1990 by an Egyptian-born American gunman. The FBI regards the Jewish Defense League as a rightwing terrorist group after two members attempted to bomb a California mosque.

Key Israeli figures in Jewish Power include Baruch Marzel, who has said homosexuality is “a disease of choice”, and Benzi Gopstein, the leader of a pro-segregation group that fights against Jews marrying non-Jews.

Another, Itamar Ben Gvir, an attorney who defends Israeli settlers implicated in violence against Palestinians in the occupied West Bank, was convicted in 2007 for inciting racism after holding signs at a protest reading: “Expel the Arab enemy.”

In a recent interview, he said Arabs who are “loyal to the state” are welcome. “But those who are not must be expelled.”

A recent poll suggested the alliance might receive as many as five seats in the 120-seat Knesset. Netanyahu has defended his merger as a way to form a rightwing coalition in April and accused his critics of “hypocrisy and double standards”.

As well as more progressive Zionist groups, who frequently attack Netanyahu, the deal was criticised by more conservative pro-Israel organisations.

The Zionist Federation of Australia said it did not typically comment on the internal political machinations of Israel but added: “Electoral gains should never justify sacrificing the very values underpinning the Jewish atate that we, as Diaspora Jewry, are proud to support.”

Under Israel’s political system, which strongly favours multi-party coalition governments, the merger will guarantee Netanyahu allies in exchange for two cabinet positions if he wins.

Running for a fifth term, the 69-year-old leader has been faced with a growing threat from the former army chief Benny Gantz, whose chances of defeating Israel’s second-longest serving premier have risen after he allied with centrist parties.

Gantz said the prime minister was damaging “our important relationship with US jews”.

“The rare reaction by Aipac, an organisation that does not usually touch on internal Israeli politics, proves that Benjamin Netanyahu has once again crossed ethical red lines just to keep his seat while causing serious harm to Israel’s image,” he tweeted.

An analysis in the right-leaning Jerusalem Post newspaper, however, said the crisis between Israel and Aipac was being overplayed. “The next time [Aipac] goes to meet a senator or congressman to lobby for additional funding for Israeli missile-defense projects, it might be asked about Otzma. It needed to take a moral stand now,” it read.

It noted that despite the criticism, Aipac announced two days later that it was honoured Netanyahu would address its annual meeting in Washington next month.

The piece went on to say: “More concerning was that Netanyahu showed the world that almost nothing is off-limits in achieving the goal of remaining in power.”