Addressing the Bundestag lower house of parliament to commemorate 40 years of diplomatic ties between the two countries, Katsav said the rise of the far-right could prevent the two countries putting World War II behind them.

"The growing authority of neo-Nazis and the ever firmer foothold they have in German public life worries us," he said. "There is the danger that the growth of neo-Nazism could postpone the end of the post-war period and prevent us distancing ourselves from the war."

"We must fight against any neo-Nazi words at an early stage, before they can spread and take hold," Katsav stressed.

The extreme-right National Democratic Party (NPD) rocked Germany's mainstream parties when it won a handful of seats in an eastern German state parliament last year. The German government has tried unsuccessfully to ban the party.

"A strong and mature democracy"

When he began his state visit on Monday, Katsav had praised Germany's efforts to fight anti-Semitism. "Germany is a strong and mature democracy and the resolve of German politicians to fight anti-Semitism is impressive," Katsav said after a meeting with his German counterpart, Horst Köhler, who addressed the Israeli parliament, the Knesset, earlier this year. "The relations between our two countries have been through some difficult times which we have overcome. We both know that in the next 40 years these relations will not be entirely normal and as clear as with other countries," Katsav added.

On Wednesday, Katsav will visit the new memorial in central Berlin dedicated to the six million Jews killed by the Nazis.

The Israeli president said Israel is concerned by signs of anti-Semitism in Germany, but recognized official determination to fight it. Köhler had assured Katsav that Germany was making every effort to fight anti-Semitism, especially by teaching children about the murder of six million Jews by the Nazis.

Partnerships and exchanges

In a bid to bind the two countries closer together, their presidents launched a "new fund for the future" to facilitate school exchanges and cultural and scientific partnerships between the two countries.

Later on Monday, Katsav held talks with Chancellor Gerhard Schröder and also met Angela Merkel, the conservative opposition candidate who will challenge Schröder in a general election expected to take place in September.