Ukip MEPs are preparing a mass walkout if an anti-Islam leadership candidate backed by Tommy Robinson is given a senior position at the top of the party.
Officials are panicking that a wave of far-right activists have infiltrated the party in order to vote for the controversial Anne Marie Waters, with one source describing them as the “Brownshirts’ Momentum” - a reference to Adolf Hitler’s militia during his rise to power.
Waters, who founded the Sharia Watch pressure group, has described Islam as “evil” and a “killing machine”, and teamed up with ex- EDL leader Tommy Robinson to form the anti-Islam group Pegida UK.
Ukip banned her from standing for the party in June’s General Election - but did not kick her out.
Several Ukip sources claim Waters has done a deal with leadership front-runner Peter Whittle to become deputy leader if he is victorious in the race.
HuffPost UK has learnt senior party figures will be holding “informal talks” in Strasbourg this week to discuss what to do if Waters wins the leadership contest or is handed the position of deputy leader.
One source believes 18 of the 20 MEPs could quit the party - including Nigel Farage.
Speaking to HuffPost UK, one MEP said mass resignations “would be an inevitable consequence” of her winning the leadership or being made deputy leader.
Another MEP said: “I think every MEP would quit apart from Stuart Agnew and perhaps Gerard Batten.”
Bill Etheridge, the West Midlands MEP who came third in the first of Ukip’s leadership elections last year, said he would “immediately resign” if Waters becomes leader.
“I am appalled that she is even allowed in the party. There’s been a failure of the management of the party in allowing her to be involved in the race.”
While talk of creating a new party is in its very early stages, HuffPost UK can reveal that members of the so-called Indigo Group - those who identify as libertarians - have been receiving secret briefings on a range of issues at the free market think tank the Institute of Economic Affairs.
Those in attendance at the briefings - one of which took place before the General Election - include party donors, MEPs and former parliamentary candidates who have since quit the party including Victoria Ayling.
Ukip’s third leadership election in a year was triggered when Paul Nuttall quit the day after the General Election, in which the party failed to win any MPs and picked up just 594,000 votes - a huge drop from the 3.9million it secured in 2015.
Nigel Farage revealed at the weekend he would not be seeking to become leader for a fourth time, leaving the field wide open for Whittle and Waters.
The Guardian has reported that 1,000 new members joining Ukip in the past two weeks has prompted fears of far-right activists attempting to take-over the party and install Waters as leader.
One source close to the top of the party said that while new people are signing up, others are quitting.
“All the decent people have been leaving,” they said, adding: “The party’s being taken over by the Brownshirts Momentum.”
Nominations for the leadership close on 28 July, and the result will be announced at Ukip’s conference in Torquay on September 29.