Germany’s domestic intelligence agency is to begin monitoring elements of the anti-immigrant Alternative for Germany (AfD), placing particular focus on Björn Höcke, a nationalist agitator considered one of the driving forces in a move to take the party towards the extreme right.

The BfV said it would also be keeping the party’s youth wing, Young Alternative (JA), under surveillance and would investigate whether the AfD as a whole should be put on its official watchlist, but said it still had insufficient evidence for doing so.

Thomas Haldenwang, the agency’s head, said Höcke’s wing of the party was “a threat to the liberal democratic principles of Germany’s constitution”.

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He said members of the party’s youth wing had demonstrated they were hostile to migrants and had called for all Muslim men to be subject to a curfew.

Haldenwang said Höcke’s wing, often referred to as “der Flügel” (the Wing), was in contravention of the German constitutional pledge to protect human dignity, as well as the principles of democracy and the state of law.

The decision, made after months of deliberation, is a blow to the rightwing populist party, which was founded in 2013 by a Eurosceptic group of academics and economists at the time of the EU’s bailout of Greece. It quickly morphed into a vehemently anti-immigrant and in particular anti-Muslim force, fuelled by anger over the decision by the chancellor, Angela Merkel, to allow more than a million refugees into Germany in 2015.

Party observers said that while the BfV’s decision might actually encourage some Germans to join the party – viewing it as another example of a perceived rise in political correctness in the country – it could put off others wary that they might be breaking the law by supporting it.

In 2017, the party entered parliament for the first time and now sits as the main opposition in the Bundestag. It is the most successful party to the right of Merkel’s conservative alliance since the second world war.

The BfV now has a right to spy on both the Wing and the JA, including taking a closer look at who its members are and requesting information about them from other organisations and authorities. It is not allowed to bug phones or monitor internet use.

Höcke has been under suspicion for some time, particularly for his links to the alt-right Identitarian movement, which is already under surveillance by the BfV for its radical white-nationalist and anti-Islam views.

In 2017, he provoked a national row after referring to Berlin’s memorial to the 6 million Jews murdered by the Nazis as a “monument of shame” and called for a“180 degree U-turn in our politics of remembrance”.

Since then, party moderates have insisted he should be thrown out, while those on the nationalist right have elevated him to the status of a party hero.

Party leaders reacted angrily to the BfV’s statement, saying they would fight it. “We consider this decision to be wrong,” said Alexander Gauland, the AfD co-leader. He accused the BfV of pandering to a “certain societal climate” and called the move a deliberate attempt to damage the AfD’s prospects before elections in the states of Brandenburg, Saxony and Thuringia.

His colleague, Alice Weidel, said the declaration showed why the BfV’s previous president, Hans-Georg Maaßen, who voiced doubts over reports far-right mobs had chased immigrants through the eastern city of Chemnitz, had not stayed in the post. “With Herr Maaßen this decision would not have been possible,” she said.

Haldenwang said his organisation was closely watching activities of campaigners who sought to attack the AfD, saying that leftwing extremists also faced being placed under observation.

Last week, Frank Magnitz, an AfD MP from Bremen, was attacked in the street in what police said was a politically motivated attack. The party blamed an atmosphere in which it was increasingly being denigrated by its political opponents and the media.

Höcke is due to stand for the party in Thuringia.