BERLIN (Reuters) - Two German nationalists plotted a nail bomb and petrol bomb attack on Muslims and asylum seekers, German prosecutors said on Thursday when they charged the men with terrorism and being part of an organized cell.

The pair, Daniel A., 41, and Marcel L., 29, were also charged with explosives and firearms offences in connection with their activities in a far-right group, which went by the English name of the Oldschool Society (OSS).

Far-right ideology is gaining popularity in poorer, eastern parts of Germany, and, on Thursday, a report on radicalization commissioned by the economics ministry said xenophobia and right-wing extremism were a serious threat to social peace and economic development in the region.

The planned bomb attack on a refugee shelter in the eastern town of Borna in May 2015 was thwarted at the last minute by police raids on the homes of the men, who had already obtained explosives from the Czech Republic.

In March, four OSS members were convicted in Munich for membership of a terrorist group and are serving jail sentences of between three and five years.

A police spokesman said the cases against the four had proceeded faster because they were charged with more serious offences. The two remaining suspects have not been detained.

The group grew out of an online chat group in 2014, acquiring a formal command structure. The older of the two men was the group’s “sergeant-at-arms”, or enforcer, while the younger mediated in disputes between members, prosecutors said.

“Under the decisive influence of the accused, the OSS aimed to use fire and nail bomb attacks to spread its far-right ideology through terrorist attacks,” they said in a statement.

The suspects also face charges relating to possession of illegal weapons after investigators found a butterfly knife and a knuckleduster at their homes during raids.

OSS, or the Office of Strategic Services, was also the acronym of the World War Two forerunner of the U.S. foreign intelligence service, the Central Intelligence Agency (CIA).