Chancellor Angela Merkel on Saturday said Germany must resist neo-Nazis "without any taboos" following the killing of a local politician by a suspected right-wing extremist.
Such violence "must be resisted from the outset and without any taboos," Merkel said during an address to the Protestant Church Congress in the western city of Dortmund.
"This is why the state is called upon (to act) at all levels and the federal government takes this very, very seriously," said Merkel.
Her remarks came days after police arrested an alleged neo-Nazi for shooting dead Kassel city local politician Walter Luebcke -- Merkel's fellow Christan Democrat -- at his home in the western town on June 2.
The 45-year-old killer has allegedly blamed his action on his anger at an influx of refugees and migrants to Germany.
Several other German politicians believed sympathetic to the migrant cause have been threatened, and that, coupled with the Luebcke shooting, prompted Merkel to speak out.
"This is not just a terrible act but also a major challenge for us to examine on all fronts where there are extreme-right tendencies," said Merkel.
Hours before her speech, Foreign Minister Heiko Maas had warned on Twitter that "Germany has a terrorism problem.
"We have more than 12,000 violent rightwing extremists in our country," said Maas, lamenting that 450 of them were able to stay underground "even though they are the subject of an arrest warrant."
Maas, a Social Democrat coalition partner of Merkel, said Germans had to call out extremist behaviour for what it is and said they must "not concede a millimetre to enemies of freedom."
Interior Minister Horst Seehofer meanwhile warned of a "very dangerous development" and said the government would be looking at ways of placing restrictions on the far right.
"This killing moves me to do everything possible to reinforce security," Seehofer, a member of the Christian Democrats' conservative partner the Christian Social Union, told the Funke media group in an interview.
One mooted restriction is curbing the right to express extremist views online and making them subject to legal action for "inciting hatred."
Seehofer said Berlin would assess how constitutionally it might take even tougher measures and deprive some people of their basic rights.
"Ours is the ministry in charged of questions touching on the constitution. We shall seriously examine the possibilities," Seehofer told Funke.
Peter Tauber, a Merkel ally and former CDU general secretary, urged that "enemies of the constitution" should be deprived of certain rights including to express their views publicly and to hold meetings.