Berlin - Islamic terrorism is the greatest threat to the security and stability of Germany, Interior Minister Wolfgang Schaeuble said in Berlin on Thursday.

Germany had been lucky to escape terrorist attacks because of preventive measures taken by the security services, he said in presenting the annual report of the nation's domestic intelligence service.

The report by the Office for the Protection of the Constitution said Islamist terrorists are increasingly setting their sights on Germany and view the country as an "operational area."

It said Islamists regard Germany as a Crusader nation and also see it as an ally of the United States and Israel - two of biggest foes of Muslim militants.

Germany's growing military presence in Afghanistan and its involvement in training Iraqi security forces had made it a target for Islamic terrorists, the report said.

The document also spoke of a growing climate of anti-Semitism among right-wing extremists in Germany.

It said neo-Nazis were making increased use of the internet and music to reach out to other sections of the population, particularly young people.

The report said the number of politically motivated crimes in Germany decreased slightly in 2007 to 28,538. The number of violent crimes by neo-Nazis also dipped slightly to 833.

The report said there were 4,400 known neo-Nazis in Germany, 200 more than in 2006. (dpa)