Mr Schily is under fire over the hitch

But the Constitutional Court, which has been examining the request for months, announced it was postponing the hearing after discovering that a party leader providing key evidence had worked as an informer for the country's intelligence service.

A significant part of the case against the party had been based on several inflammatory statements made by him, but his status as a former informant raises the possibility that he was an acting as an agent-provocateur for the government.

The court says it will check the legal implications of hearing a case based on the information of informants, and the BBC's William Horsley in Berlin says it may even decide to reject the case in its entirety.

Troubled minister

There is widespread concern that the authorities may have undermined their own case by their choice of evidence, and mounting criticism of the Interior Minister, Otto Schily, who filed the request for a ban.

In a statement by Mr Schily, he pointed out that contacts between the party member and the intelligence agency "had ended many years ago".

"All of the statements from him which have been used as evidence of the anti-constitutional nature of the NPD were made during a period of time long after contact had been broken off."

Opposition parties and Jewish leaders said they were outraged.

"It is inexcusable that the NPD could survive this important effort to ban it because for whatever reason there was some irregularity," said Michael Friedman, vice-president of Germany's Central Council of Jews.

The conservative Christian Democrats meanwhile pointed the finger at the government.

"I find it difficult to forgive what is happening now," said their justice spokesman Rupert Scholz.

Lease of life

The NPD is a fringe party with some 6,000 members, favouring policies benefiting ethnic Germans and demanding an end to immigration. It is blamed for inciting attacks against foreigners.

It is now considered the most dangerous of Germany's several far-right political groups.

While the party is widely denounced within mainstream Germany, some were nonetheless reluctant to see it banned, fearing the implications for freedom of speech and the possibility that a failed attempt would effectively give the group a clean bill of health.

Only two political parties have been banned in post-war Germany.

The successor to the Nazi Party was outlawed immediately after the war, and the Communist Party was banned in West Germany in the 1950s.

Sensing that the NPD may not be joining these two parties imminently, a spokesman said on Wednesday that his party was now preparing to take part in national elections, scheduled for September.