Europe's mainstream political parties are engaged in a worsening feud over how to deal with the growing power of extreme rightwing anti-immigrant movements. Amid a backlash against immigration that has shaken Germany, France, the Netherlands, and Sweden in recent months, governments of the centre-right or centre-left appear at a loss to counter the appeal of extremist populists who have moved from the madcap fringes of national politics into government, or propping up minority centrist coalitions.

A liberals-led coalition has just taken office in the Netherlands dependent on the parliamentary support of Geert Wilders, Europe's leading Islam-baiter. In Denmark, another liberals-led government also relies on the anti-immigrant nationalists of the Danish People's Party for survival. Last week, the DPP won a tightening of the most draconian immigration laws in Europe in return for agreeing to the government's budget for next year.

Alarmed at the growing appeal of the far right, leaders of the centre-right and centre-left are struggling to form a coherent response. Attempts to construct a cross-party European anti-extremism pact are falling victim to the expediencies of national politics. "This is becoming a very hot political issue," said a spokesman for the Alliance of Liberals and Democrats for Europe, a large grouping in the European parliament.

Last week Wilfried Martens, a former Belgian prime minister who leads the European People's party which groups ruling Christian democrats in most of the EU, made approaches to social democrat and liberal leaders with the aim of forging a joint anti-extremist position.

"Martens wants a common approach of the political parties," said his spokesman, Kostas Sasmatzoglou. "The phenomenon is growing and these far-right parties are getting stronger and stronger. We all face the same issue, but we should not be trying to score political points."

The overture looks doomed. "I don't see a solution in going hand-in-hand with the conservative parties," said Poul Nyrup Rasmussen, the former Danish prime minister who heads the pan-European association of social democratic parties, the Party of European Socialists (PES). "The conservatives are saying, 'If you can't beat the far right, join them,'" he said.

Leading social democrats are to meet in Budapest on Wednesday to issue an appeal against deal-making with the far right. "It's not about a cordon sanitaire," said Rasmussen, referring to past failed policies of ostracising and ignoring the populists, particularly in Belgium and Austria. "It's about confronting them."

Last month, Europe's social democrats endorsed a policy ruling out coalitions or electoral pacts "with a party inciting or attempting to stir up racial or ethnic prejudices and racial hatred at European or national levels". The policy also rejected the forging of tacit parliamentary alliances with such parties, and the adoption of far- right policies that are proving popular. It demanded that all mainstream parties sign up to the principles.

But conservatives and liberals are already in bed with the far right in Denmark, Netherlands, and Italy. "We can't dictate or intervene in domestic politics," said Sasmatzoglou for the centre-right. "They are all different situations."

Critics say that until earlier this year, Rasmussen and the PES were supporting a centre-left government in Slovakia that was in coalition with the extreme Slovak National party. Last week Turkey's ambassador in Vienna denounced Austria's governing social democrats for being too timid to attack the militant and increasingly popular anti-Muslim policies of the far-right Freedom party.

"There is a strong need for real political leadership to resist the 'fortress Europe' temptation and to avoid extremism and demagogy," said Cecilia Malmström, the European commissioner for home affairs. "In a time of economic crisis, migrants are among the most vulnerable groups."

The centre-left is losing support across Europe to the extreme right. Recent gains for the extremists have been at the expense of Sweden's and Austria's social democratic parties and the Dutch Labour party, with the far right prospering in cities with significant immigrant populations that traditionally voted for the left.

The anti-immigrant policy gains made in recent months look likely to continue. In Switzerland polls show majority support for a referendum this month demanding summary deportation of foreigners sentenced for petty crimes, not just for more serious crimes as up till now. The plebiscite is being organised by the rightwing Swiss People's party, which a year ago won another referendum banning minarets.

In France there are growing calls within President Nicolas Sarkozy's centre-right UMP party for a merger with Jean-Marie Le Pen's National Front. A poll last month showed one-third of UMP voters backed joint electoral pacts with the National Front. In Italy, where Silvio Berlusconi is in coalition with the far-right Northern League, the interior minister has announced a new crackdown on expelling EU citizens who cannot support themselves, a policy aimed at east European Roma and aping Sarkozy's summer expulsions in France. Denmark's tightened immigration laws should deploy a new weapon – bare breasts – to deter newcomers, the far-right People's party said last week. A documentary film on Denmark that is shown to immigrants as part of the test for entry should include topless bathers, said Peter Skaarup, the party's foreign affairs spokesman. "If you're coming from a strict, religious society that might make you stop and think: 'Oh no,'" he told the newspaper, Jyllands-Posten. "Topless bathing probably isn't a common sight on Pakistani beaches. I honestly believe "