The head of the German anti-Islamisation movement Pegida has stepped down after a picture of him posing as Adolf Hitler went viral. Lutz Bachmann, 41, a butcher’s son from Dresden and co-founder of the organisation, was seen as Pegida’s figurehead and his resignation throws the future of the group into doubt.

The picture of Bachmann posing as Hitler after a session at his hairdresser, complete with a Hitler hairstyle dyed black and parted on the right and a toothbrush moustache, went viral on Wednesday after it was published by , a local newspaper, the Dresden Morgenpost.

Pegida’s popularity has led to widespread fears that Germany is in the grip of a new breed of far-right ideologues, and the picture raised questions about the group’s allegiance to the far-right scene. The image, which had appeared on Bachmann’s Facebook page, was accompanied by the line: “He’s Back,” after Timur Vermes’ best-selling 2012 satirical novel of the same name about Hitler.

Bachmann, a publicity agent, deleted his profile shortly after being contacted by the Morgenpost. A Morgenpost reader discovered the photograph, along with what appeared to be a closed Facebook conversation between Bachmann and one of his Facebook contacts, in which he described immigrants as “cattle”, “scumbags” and “trash”. The comments were posted on 19 September, aroundabout two months before the first Pegida march in Dresden.

State prosecutors said on Wednesday they had begun investigating Bachmann on charges of sedition. He resigned after a meeting of the 12 members of Pegida’s leadership committee at which Bachmann apologised for the picture A statement is expected to follow on Wednesday evening.

Pegida spokeswoman Kathrin Oertel, told Spiegel Online Bachmann’s resignation was the “only possibilty for the movement”. “As an association, we reject the Facebook postings made by Lutz Bachmann in September which have now come to light in the strongest possible terms. They do nothing to nurture trust in Pegida’s goals or its protagonists.”

A spokesman for Bernd Lucke, the head of the political party Alternative für Deutschland, an anti-euro party which has publicly expressed an allegiance with the aims of Pegida, said that with his “sad utterings and disgusting jokes”, Bachmann had “embarrassed the people of Pegida who have been compelled by honest concerns to take to the streets”.

Responding to the picture, Bachmann told Wednesday’s Bild: “I took the photo at the hairdresser’s, for the publication of the audiobook of the satire He’s Back … you need to be able to joke about yourself now and then”. Asked about the derogatory comments he allegedly made about immigrants, Bachmann replied: “We don’t comment about private matters.”

Bachmann, who has multiple convictions for burglary, assault and drug possession, was said by German intelligence services to be a target for Islamist terrorists who said on social media sites they intended to kill him. For that reason, a planned Pegida demonstration in Dresden on Monday, which would have been the group’s 13th, was cancelled.

Pegida, which has been growing from strength to strength and at its last gathering attracted 25,000 supporters, has vowed to meet again next week in the east German city. But it is unclear whether it has a future without Bachmann, who was by far its best orator, and had garnered a popular following.

Legida, the group’s Leipzig offshoot, will meet on Wednesday evening, with about 100,000 pro- and counter-protesters expected to gather. Nineteen counter-demonstrations and vigils have been registered with authorities.

But town officials have banned the Legida marchers from taking the historical route through the city used for the peaceful anti-communist protests of 1989, which started in Leipzig and led to the collapse of the Berlin Wall. Anger is already high among former dissidents that the movement has hijacked the phrase “Wir sind das Volk” or “We are the people” that was chanted 25 years ago.

In Pegida’s first ever press conference in Dresden on Monday, Bachmann and Oertel, insisted that the group was not racist, and later in a heated television discussion distanced themselves from footage showing Pegida demonstrators delivering racist remarks.

Bachmann has always been keen to stress his pro-foreigner credentials, showing photographs on his Facebook site of his Turkish best man, and saying he has “Muslim friends”.

Meanwhile a Catholic priest who took part in a demonstration organised by the Pegida-offshoot group Dügida in the western city of Duisburg on Monday has been banned from preaching by his religious elders, after he compared the movement to the Crusades.