Prosecutors in the eastern city of Dresden said they had "received an anonymous tip-off on February 12 that a 21-year-old German man from the Meissen area had armed himself with explosives to carry out an attack on a shelter for asylum seekers in Senftenberg", in neighbouring Brandenburg state.
Investigators searched two properties in the Meissen area on Wednesday evening, seizing "two pyrotechnic objects, knuckle dusters, folding knives" and various other weapons.
"The 21-year-old suspect has been taken into provisional custody," said the statement, from police and prosecutors.
The arrest comes amid a heated debate in Germany on migration and asylum ahead of a general election on February 23rd.
The far-right Alternative for Germany (AfD) is set for its best-ever result of around 20 percent, according to current polling. It is particularly popular in eastern German states.
The centre-right CDU/CSU, which is leading the polls on around 30 percent, has called for a crackdown on irregular migration following several deadly attacks blamed on migrants and asylum seekers.
The latest such incident came on Thursday, when an Afghan asylum seeker was arrested after a car ramming attack wounded at least 28 people in the southern city of Munich.
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