German police sprayed tear gas on several hundred demonstrators throwing bottles and stones at busloads of asylum seekers arriving to Heidenau, a eastern German town near Dresden, in the early hours of Saturday, during the scuffle that left several wounded, the media reported.
Before the latest clash between police and the protestors, several hundred people had held a peaceful demonstration to object to the expected arrival of refugees who were due to settled in empty buildings across the German town.
According to media report, a group of far-right radicals, many belonging to the militant National Democratic Party (NPD), joined the protest and started shouting xenophobic slogans.
The demonstrators also chanted "wir sind das volk [we are the people]," a slogan originally used by East Germans during protests leading up to the fall of the Berlin Wall, but adopted this year by the anti-Islam PEGIDA movement - Patriotic Europeans Against the Islamization of the West - which attracted tens of thousands of demonstrators to weekly rallies.
"After the riots, the situation is now calm," a police spokesman told Tagesspiegel online, adding it was not yet clear how many people had been injured or how many arrests there had been.
Germany is struggling to cope with the rapid increase in the number of asylum seekers and politicians are worried about growing tensions however, the Government officials criticized the demonstration against the refugees.
"Sometimes you don't want to be a foreigner in our country. But neither do you want to be a German. I am ashamed of these racists in Heidenau," Deputy Foreign Minister Michael Roth tweeted.
Responding to the incident, Justice Minister Heiko Maas said in a statement: "we must never tolerate people in our country being threatened or attacked... there is zero tolerance for xenophobia or racism."
Interior Minister Thomas de Maiziere said last week that he now expected 800,000 sylum seekers to arrive in Germany this year, which is four times more than last year.
Last week, the German Chancellor Angela Merkel, condemned attacks on refugees and said the migrant crisis could surpass Greek financial crisis challenging the European Union.