Twitter's move marked the first time it has implemented a new feature, called "Country Withheld Content", that allows the service to narrowly censor tweets considered illegal in one specific country.
A Twitter spokesman confirmed Thursday that the account operated by the Besseres Hannover group and all of its content have been blocked for German users, but "remains visible to Twitter users in other countries".
As it rolled out its blocking tool for the first time, Twitter found itself caught in the crosswinds of public pressure, a situation likely to become frequent as the service, now boasting 140 million monthly active users and growing, continues to expand in reach and influence.
"I will not go so far as to call the policy good, but they're attempting to do the least damage" because Twitter's blocking tool only applies to users in one country," said Eva Galperin, a coordinator at the Electronic Frontier Foundation, a digital free speech advocacy group.
Some Twitter users chimed in with concern.
"And now Twitter will censor accounts based on requests from governments," a user from Chicago named Brian Stanish tweeted. "What if this happened before the Arab Spring?"
The Anti-Defamation League praised Twitter's move, but said it needed to go further to ban offensive and hate speech in its terms of service. Compared to social media services like Google Inc's YouTube and Facebook, Twitter currently has one of the most lax terms-of-service restricting speech, reflecting the company's long-stated position that it would rather err on the side of free speech.
Earlier this week, the ADL criticized the company for allowing the "#unbonjuif" - or "a good Jew" - hashtag to circulate in France, which prompted a flurry of anti-Semitic tweets. Speech that incites hate toward people or groups based on religion, race or ethnicity may be prosecuted under French law.
Robert Trestan, the Cyber-hate Response group director at the ADL, said Twitter was increasingly the social media platform of choice for anti-Semitic groups compared to Facebook.
"Twitter is the easiest way to spread that message and use those hashtags," Trestan said
For its part, Twitter's top executives have long vowed to resist censorship except when it conflicts with local law. Alex MacGillivray, Twitter's General Counsel, declared in 2011 that Twitter would represent the "free speech wing of the free speech party".
Following the announcement that Twitter had blocked the neo-Nazi group Thursday, MacGillivray tweeted: "Never want to withhold content; good to have tools to do it narrowly & transparently," and linked to a copy of the police letter.
The Twitter spokesman said the move to block messages Thursday by Besseres Hannover - which means "a better Hanover" came at the request of police in the northern German city.
According to Hanover police, Besseres Hannover was banned on September 25 and ordered to halt all its activities. Public prosecutors searched the homes of more than 20 suspected members of the group last month who are accused of forming a criminal organisation with the intention of committing crimes.
Police said the group had 40 members and had recently distributed copies of its far-right magazine at schools.
Hanover Police President Axel Brockmann said in a statement last month he had pledged when taking office "to crush this group of neo-Nazi and far-right activists wherever it appeared".
Authorities and residents across Germany have become more sensitive to the threat of far-right militants since revelations last year that a neo-Nazi cell waged a seven-year racist killing spree through the country, murdering nine people, mostly of Turkish origin.
© Thomson Reuters 2012
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