More damaging evidence has emerged of the German authorities' failure to stop a group of neo-Nazi terrorists who killed 10 people, robbed 14 banks and planted two nail bombs during 13 years on the run.

On Tuesday, the Hessen branch of the domestic intelligence service, the Verfassungsschutz, or BfV, admitted that one of its agents had been present in April 2006 when two members of the National Socialist Underground (NSU) shot dead a 21-year-old Turk in an internet café.

It has now emerged that the agent, who was transferred to less-sensitive work following an investigation at the time, openly held rightwing views and was known in the village where he grew up as "Little Adolf". When police raided his flat following the murder, they found a cache of guns, for which he had a legitimate licence, and extracts from Mein Kampf, according to Der Spiegel. There are unconfirmed reports that the man was present at three or more other neo-Nazi murder scenes.

Hajo Funke, one of Germany's most foremost experts in rightwing extremism, said on ARD television: "It can't be ruled out that his BfV employee took part in the murder, and that is a scandal." He has called the case "a Watergate-scale" crisis for German secret intelligence.

The interior minister, Hans-Peter Friedrich, has called for a national register listing all neo-Nazis. The database should hold "information about potentially violent rightwing extremists and rightwing politically motivated acts of violence", he told the Süddeutsche Zeitung. It should be accessible to all 16 regional branches of the domestic intelligence service, as well as the national umbrella organisation, plus police authorities, he said.

Following the discovery of the terror cell's base in the quiet town of Zwickau, near the Czech border, the German government is under pressure to explain how the group managed to carry out their murderous acts undetected for so long. The two men and one woman believed to be founder members of the NSU were known to police in their home town of Jena, east Germany, after a bomb-making factory was discovered in the garage rented by the woman, Beate Zschäpe, in 1998.

The local branch of the Thuringian secret service allegedly had 24 lever-arch files on the trio and yet they only uncovered the cell years after they carried out at least 10 murders – and after the men were found dead, apparently following a joint suicide pact, and Zschäpe turned herself in to police.

Zschäpe has remained silent since turning herself in to police last week, but some local media reports suggested she had told police she was ready to be interviewed about her involvement on Wednesday.

On Tuesday evening, Angela Merkel's Christian Democratic Union (CDU) voted at its party conference in Leipzig for a ban on the NPD (German Nationalist party), a legal far-right group which has seats in a number of local parliaments in former east Germany. The opposition Social Democrat (SPD) party has also called for the NPD to be outlawed.

Such calls have been criticised by politicians in Merkel's own coalition. Hans-Peter Uhl, an expert in interior security from the CSU, the Bavarian sister party of the CDU, said: "There is no better sign of democracy than for the electorate to vote against the NPD at elections," he said. "That's the most noble way."

Uhl said it would be better for Germany's strict data protection laws to be changed to allow detectives to analyse communications. "The whole country is wondering how big the neo-Nazi quagmire is in Germany. Without using internet and telephone data collected from the Zwickau cell that is going to be difficult to establish," he told the Neue Osnabrücke Zeitung.

Earlier this week Merkel described the case as a "disgrace" for Germany.

• This article was amended on 16 November 2011 because the original said NPD stands for German Democratic party. This has been corrected.