Two alleged supporters of a neo-Nazi terrorist group have been arrested after 155kg of explosives were discovered in Germany.

One suspect had built a homemade bomb emblazoned with a swastika and symbol of the Nazi SS, prosecutors announced on Saturday.

The men, aged 18 and 24, were arrested after the explosives were discovered inside a house in Lauterecken, causing more than 80 local residents to be evacuated from the surrounding area so the material could be safely removed.

Numerous weapons and items with banned Nazi symbols were found in the raids related to a separate neo-Nazi plot in Bamberg (EPA)

The pair denied planning a terror attack when they were arrested in December, SWR television reported, claiming to be amateur pyrotechnics preparing for a New Year’s Eve firework display.

The two men, of German origin, are being held on suspicion of violating explosives laws and preparing a “serious act of state-threatening violence”.

Prosecutors are examining a possible link to the Oldschool Society (OSS), an extremist organisation known to have planned attacks on refugee centres and mosques since it emerged in 2014.

A spokesperson said the teenage suspect told investigators he had attended an OSS meeting in Rhineland-Palatinate state over the summer, the DPA news agency reported.

Four members of the group are already on trial in Munich for allegedly planning an attack on asylum seekers.

Refugees settle in Germany Show all 12 1 /12 Refugees settle in Germany Refugees settle in Germany Germany Mohamed Zayat, a refugee from Syria, plays with his daughter Ranim, who is nearly 3, in the one room they and Mohamed's wife Laloosh call home at an asylum-seekers' shelter in Vossberg village on October 9, 2015 in Letschin, Germany. The Zayats arrived approximately two months ago after trekking through Turkey, Greece and the Balkans and are now waiting for local authorities to process their asylum application, after which they will be allowed to live independently and settle elsewhere in Germany. Approximately 60 asylum-seekers, mostly from Syria, Chechnya and Somalia, live at the Vossberg shelter, which is run by the Arbeiter-Samariter Bund (ASB) charity 2015 Getty Images Refugees settle in Germany Germany A refugee child Amnat Musayeva points to a star with her photo and name that decorates the door to her classroom as teacher Martina Fischer looks on at the local kindergarten Amnat and her siblings attend on October 9, 2015 in Letschin, Germany. The children live with their family at an asylum-seekers' shelter in nearby Vossberg village and are waiting for local authorities to process their asylum applications. Approximately 60 asylum-seekers, mostly from Syria, Chechnya and Somalia, live at the Vossberg shelter, which is run by the Arbeiter-Samariter Bund (ASB) charity Getty Images Refugees settle in Germany Germany Kurdish Syrian asylum-applicant Mohamed Ali Hussein (R), 19, and fellow applicant Autur, from Latvia, load benches onto a truckbed while performing community service, for which they receive a small allowance, in Wilhelmsaue village on October 9, 2015 near Letschin, Germany. Mohamed and Autur live at an asylum-applicants' shelter in nearby Vossberg village. Approximately 60 asylum-seekers, mostly from Syria, Chechnya and Somalia, live at the Vossberg shelter, which is run by the Arbeiter-Samariter Bund (ASB) charity Getty Images Refugees settle in Germany Germany Mohamed Ali Hussein ((L), 19, and his cousin Sinjar Hussein, 34, sweep leaves at a cemetery in Gieshof village, for which they receive a small allowance, near Letschin Getty Images Refugees settle in Germany Germany Mohamed Zayat, a refugee from Syria, looks among donated clothing in the basement of the asylum-seekers' shelter that is home to Mohamed, his wife Laloosh and their daughter Ranim as residents' laundry dries behind in Vossberg village on October 9, 2015 in Letschin, Germany. The Zayats arrived approximately two months ago after trekking through Turkey, Greece and the Balkans and are now waiting for local authorities to process their asylum application, after which they will be allowed to live independently and settle elsewhere in Germany Getty Images Refugees settle in Germany Germany Asya Sugaipova (L), Mohza Mukayeva and Khadra Zhukova prepare food in the communal kitchen at the asylum-seekers' shelter that is their home in Vossberg village in Letschin Getty Images Refugees settle in Germany Germany Efrah Abdullahi Ahmed looks down from the communal kitchen window at her daughter Sumaya, 10, who had just returned from school, at the asylum-seekers' shelter that is their home in Vossberg Getty Images Refugees settle in Germany Germany Asylum-applicants, including Syrians Mohamed Ali Hussein (C-R, in black jacket) and Fadi Almasalmeh (C), return from grocery shopping with other refugees to the asylum-applicants' shelter that is their home in Vossberg village in Letschin Getty Images Refugees settle in Germany Germany Mohamed Zayat (2nd from L), a refugee from Syria, smokes a cigarette after shopping for groceries with his daughter Ranim, who is nearly 3, and fellow-Syrian refugees Mohamed Ali Hussein (C) and Fadi Almasalmeh (L) at a local supermarket on October 9, 2015 in Letschin, Germany. All of them live at an asylum-seekers' shelter in nearby Vossberg village and are waiting for local authorities to process their asylum applications, after which they will be allowed to live independently and settle elsewhere in Germany 2015 Getty Images Refugees settle in Germany Germany Kurdish Syrian refugees Leila, 9, carries her sister Avin, 1, in the backyard at the asylum-seekers' shelter that is home to them and their family in Vossberg village in Letschin Getty Images Refugees settle in Germany Germany Somali refugees and husband and wife Said Ahmed Gure (R) and Ayaan Gure pose with their infant son Muzammili, who was born in Germany, in the room they share at an asylum-seekers' shelter in Vossberg village on October 9, 2015 in Letschin, Germany. Approximately 60 asylum-seekers, mostly from Syria, Chechnya and Somalia, live at the Vossberg shelter, which is run by the Arbeiter-Samariter Bund (ASB) charity, and are waiting for authorities to process their application for asylum 2015 Getty Images Refugees settle in Germany Germany German Chancellor Angela Merkel pauses for a selfie with a refugee after she visited the AWO Refugium Askanierring shelter for refugees in Berlin Getty Images

Federal prosecutors charged the three men and a woman with “establishing a terror organisation” and preparing attacks using explosives in January 2015.

Officials said members had planned to bomb refugee accommodation in the German town of Borna, and travelled to the Czech Republic to buy pyrotechnics which they planned to make into bombs packed with nails and fuel.

The interior ministry has classified the OSS as a dangerous organisation but it was also dubbed the “stupidest terror group in Germany” by media reporting that members discussed plots openly on Facebook.

A rise in extremism has been documented in Germany since the start of the refugee crisis and a series of terror attacks, with far-right groups including Pegida staging protests against immigration and the “Islamification of Europe”.

Numerous attacks on refugee centres have been documented as part of a rise in political violence by both the right and left wing.