Eight Russian-speaking Israeli nationals aged between 16 and 21 were arrested in connection with a series of attacks against Orthodox Jews, immigrants, drug addicts, and gays. Police have released the group's home-made videos of the attacks.
Haaretz quoted Police Commissioner David Cohen on Tuesday as saying that neo-Nazis in Israel "operate in small groups or alone." He said the investigation over the past year, which led to Sunday's arrests, would help police to track down the remaining neo-Nazi activists.
The eight young men were charged Tuesday with possession of weapons and assault.
Investigations in the case were launched over a year ago, when a synagogue in Petah Tikva, central Israel, was desecrated and sprayed with swastikas.
Haaretz reported that on Monday night, a new case of synagogue graffiti was discovered in the country's southernmost town of Eilat, where slogans, including "Long live Hitler and Jesus Christ" and "Hitler the Messiah" had been painted on the walls.
The racist attacks have sent shockwaves through Israel, a country established after World War II as a safe haven for Jews following the Holocaust, in which around six million Jews were massacred.
Israel, home to seven million, has around one million immigrants from the former Soviet Union, many of whom have only tenuous claims to Jewish heritage and moved to the country for economic reasons.
Police have identified the neo-Nazi group's ringleader as 19-year-old Eli Boanitov, who reportedly told police that he would remain a Nazi "until we kill them all." However, Boanitov admitted that his grandfather was half Jewish.
The case, which has dominated Israeli media in the past three days, has sparked widespread criticism of the country's immigration policy, and the granting of rights to immigrants from ex-Soviet states that are not given to ethnic Arabs, whose families have lived in present-day Israel for generations.
Israeli Prime Minister Ehud Olmert called on Israelis to avoid any backlash against the country's Russian-speakers.
"I stress that we should not implicate an entire community and engage in generalizations," the prime minister said, while highlighting the achievements of Russian immigrants, many of whom have distinguished careers in politics, medicine, and science.
A ninth member of the neo-Nazi group is believed to have fled Israel. One of the arrested eight youths is the grandson of a Ukrainian-born Holocaust survivor.