Greece is planning to cut state funding to the extreme right-wing Golden Dawn party, whose leadership was arrested over the weekend on charges of acting as a criminal organisation.
Under legislation being submitted to parliament, state funding will be suspended for a party if any members of its leadership or MPs are being prosecuted for felonies. Six Golden Dawn MPs, 14 members and two police officers have been arrested, while arrest warrants have been issued for another 10 people.
The government crackdown was sparked by the fatal stabbing of a Greek man blamed on a Golden Dawn supporter earlier this month. The arrests mark the first time since the 1974 restoration of democracy after a military dictatorship that sitting members of a Greek Parliament have been arrested.
Golden Dawn, a formerly fringe nationalist group with neo-Nazi roots, enjoyed a meteoric rise in popularity during Greece's financial crisis. With 18 MPs in the 300-member Parliament, it is due to receive more than 873,000 euros in 2013.
"Democracy cannot fund its rivals," said Deputy Prime Minister and Foreign Minister Evangelos Venizelos. "Therefore when you have a criminal organization which is operating inside a political party, there must be sanctions regarding funding."
The arrested MPs retain their seats in parliament unless they are convicted or resign. The party has hinted it could have all its MPs resign and leave the seats empty, in an attempt to trigger elections in their constituencies.
But government officials have been dismissive of the threat, saying the constitution has enough safeguards that it could avoid holding repeat votes.
Since its 2012 election success, Golden Dawn has been blamed for numerous violent attacks, mostly against dark-skinned immigrants but also against gays and left-wing activists.