* Anti-Islam movement stages biggest rally for months
* Social media suggest rising hostility to foreigners
By Madeline Chambers
BERLIN, Oct 20 (Reuters) - Cabinet ministers warned on Tuesday that right-wing radicalism and xenophobia are on the rise in Germany after the anti-Islam PEGIDA movement held its biggest rally in months, spurred on by the arrival of hundreds of thousands of migrants.
Emboldened by popular fears about the refugee crisis, some 15-20,000 people joined the Monday evening rally in Dresden by Patriotic Europeans Against the Islamisation of the West (PEGIDA). Many waved German flags and chanted "Out! Out!"
The leader of the Social Democrats (SPD), who share power with Chancellor Angela Merkel's conservatives, told the Sueddeutsche daily that PEGIDA was a "right-wing populist and in part openly radical right-wing movement".
It was, said Sigmar Gabriel, an extension of the anti-immigrant Alternative for Germany (AfD) party, which has gained support in opinion polls, and the far-right National Democratic Party (NPD), with a more brutal vocabulary.
In a speech that outraged many Germans, Turkish-born writer Akif Pirincci, a long-time German resident, told the crowd that politicians were ignoring grassroots concerns about migrants and that concentration camps were "unfortunately out of action". Some PEGIDA supporters walked away as he spoke.
Dresden prosecutors are considering opening an investigation into Pirincci, who also spoke of "Muslim rubbish tips". They are already investigating PEGIDA founder Lutz Bachmann, who quit in January after a photo was published of him posing as Hitler.
In a further sign of concern about mounting xenophobia, top-selling German newspaper Bild published a double-page spread of named hate messages on social media, including, "Piss off to where you've come from", and, "Go to Auschwitz and Buchenwald, there is enough room, the ovens just have to be heated up."
The concern about growing radicalism coincides with a drop in popular support for Merkel over her handling of the crisis.
She has been criticised by some in her conservative bloc for opening Germany's borders to Syrian refugees, a move they say has spurred more migrants from any country to come. As German towns struggle to house and look after migrants, her insistence that Germany will cope looks too optimistic to many people.
SPD Justice Minister Heiko Maas spoke of a radicalising atmosphere he called "extraordinarily alarming". Conservative Interior Minister Thomas de Maiziere wrote in Bild daily that everyone must take a stand against hate.
"We do not accept that dignity and respect are replaced by hate towards those who think differently ... A patriot loves his country and does not hate others," he wrote.
The PEGIDA rally marked the grassroots movement's first anniversary. It had all but fizzled out following infighting when Bachmann resigned but a recent spike in migrant numbers has given it a new lease of life, though some 14,000 counter demonstrators also gathered in Dresden on Monday.
Polls show that Merkel's handling of the refugee crisis has cost her support while the anti-immigration AfD has gained.
An INSA poll released on Monday showed support for Merkel's conservative bloc at a 2-1/2-year low of 37 percent and the right-wing AfD at 7.5 percent, a seven-month high.
AfD politician Bjoern Hoecke drew criticism for pulling a German flag out of his pocket on a talk show and draping it over the arm of his chair while saying how much he loved his country and that Germany could not absorb so many migrants.
U.N. officials said on Tuesday that more than 643,000 refugees and migrants in all had entered the EU from the Middle East, Africa and Asia this year.. Germany alone expects at least 800,000 by year-end. (Reporting by Madeline Chambers; Editing by Mark Heinrich)