The project, which focuses on reprinting newspapers from 1933 to 1945, is meant to educate Germans but has instead sparked outrage from Jewish groups and authorities worried about the possible offence to Holocaust survivors and the potential misuse of the material by neo-Nazis.

On Thursday, the Bavarian finance ministry, which says it holds the rights to all publications from the main Nazi publishing house, said it would resort to the courts to stop future papers being published. It added it was pressing charges against the British publisher, Peter McGee, for copyright infringement.

The latest edition of the paper, the Voelkischer Beobachter (People's Observer), greeted Germans at newsstands Thursday with a headline proclaiming "Huge Fire in the Reichstag" with a photograph of the Reichstag parliament building in flames, seen as a pivotal moment in the rise to power of the Nazis.

"Murder, terror, fire and destruction: these are the terrible things this fanatical party (the Communists) leaves behind it," Joseph Goebbels writes in the commentary on the first page. "We've had enough," says the headline. "Now we're going to take ruthless and dramatic measures."

Jewish group slams "Hitler sells" concept

The project called "Zeitungszeugen," a word play on the German words for "newspaper" and "witness," is supported by some German historians who have annotated the articles.

But the Central Council of Jews in Germany said on Thursday it backed Bavaria's decision to ban the newspapers, complaining it was "left to complete chance" whether people also read the historical commentary or just the papers in isolation.

"This is not what serious political education looks like," Stephan Kramer, the general secretary of the organization said in a statement, adding the project seemed to be irresponsibly driven by the motto "Hitler sells."

Charlotte Knobloch, president of the Central Council for Jews in Germany said it was vital people read the historians' comments included in the package with the papers.

"As a Holocaust survivor, these texts are much more to me than just interesting historical documents. They are part of a harrowing reality that I can still recall," she said in a commentary on the publishers' Web site. If people read only the propaganda, she acknowledged, it could be "disastrous."

Creators insist on educational value

The makers of the project have however rebuffed the criticism, calling it an attack on press freedom.

Sandra Paweronschitz, chief editor of the series, was quoted by news agency AFP as saying the argument that the papers could fuel extremist activity was "as short-sighted as it is wrong."

She pointed out that the series was accompanied by commentary from leading historians putting the papers in their proper historical context.

"We will fight this attack on the freedom of the press with all legal means -- if necessary not only in civil courts but also before the Federal Constitutional Court," she said.

Several German historians have also defended the project.

Wolfgang Benz, a professor at the Berlin Technical University's Center for Research on Anti-Semitism, told news agency DPA recently that the edited copies were more educational and less harmful than German television history programs about the Nazis, which include Nazi film footage and images of swastikas.