Party founder and leader Bernd Lucke, along with three close allies, conceded to several German journalists on Tuesday that his party had the potential to develop into an anti-American, Islamophobic German version of the National Front, Süddeutsche Zeitung reported.
The extraordinary admission happened in Strasbourg where Lucke and party MEPs Hans-Olaf Henkel, Bernd Kölmel and Joachim Starbatty attempted to clear up confusion about their future in the party.
On Monday Lucke along with other economic liberals in the party announced the setting up of a group called 'Wakeup Call 2015'.
Many party members had expressed "their dissatisfaction with the perception of the AfD and at the direction which some of the party leaders are trying to take," the leaders said on the group's website, adding that "many are considering leaving the party or are calling for the founding of a new one."
The party leaders said that they, too, shared these concerns and had no desire to serve as a respectable veneer for extremist opinions.
But in Strasbourg on Tuesday, Lucke assured journalists that setting up Wakeup Call 2015 did not amount to a threat to leave the party, saying the opposite was true. He said he was making a call for moderates to stay in the fold and argued that Wakeup Call 2015 was needed to stop the party from turning into a home for the far right.
"It is an initiative to prevent mass flight from the party," he said. "The vast majority want the party to stick to the principals on which it was founded in 2013."
Drift to the right
An economist by profession, Lucke set up the AfD in 2013 as a protest against the euro, which he described as ill-fitted to the different cultures and economic priorities of the member states.
Last year was a breakthrough year for the party as they first won 7.1 percent of the vote in the European election before going on to considerable success in east German state elections, easily passing the 5 percent barrier for representation in the legislature on every occasion.
But the party's success in east Germany also led to the empowerment of a populist right-wing faction which has recently challenged Lucke for control of the party agenda.
Particularly contentious in recent weeks has been the refusal by the leaders of this faction to unconditionally condemn the National Democratic Party, widely viewed in Germany as being a neo-Nazi organisation.
Lucke's Wakeup Call has not gone down well with the leaders of this faction.
Alexander Gauland, the party head in Brandenburg, called it a "weapon of war" for the purpose of maintaining control within the party.
Now the party head in Saxony, Frauke Petry has announced she is considering legal proceedings against the new group, reports the Frankfurter Allgemeine Zeitung.
Speaking at a press conference in Dresden, Petry said "the party doesn't need a wakeup call. I am confused at this new group that was not agreed upon with anyone in the party leadership."
She added that she doubted that the group was compatible with the party's constitution.
Threatening to take on Lucke for the party leadership at the party's June convention, Perty said "the AfD can exist without Mr Lucke in 2015."